Most business owners have never experienced a chargeback and probably have had a small number of failed transaction attempts, but given the situation with COVID-19, we’ve seen an increase in both. For that reason, we wanted to proactively share this info on best practices and make sure you understand how each of these scenarios may affect you financially.

It’s important to note that both failed transaction fees and chargebacks are charged on the date of the failed transaction or dispute being filed. We know right now there may be a lot of financial stress on your business, but we want to encourage you to try and keep funds in your bank account to cover both of these and avoid any potential overdraft fees.

Chargebacks

What it means

A chargeback, also referred to as a payment dispute, occurs when a cardholder questions a transaction and asks their card-issuing bank to reverse it. The ability to dispute a payment is meant to protect consumers from unauthorized transactions. By default, the chargeback is always awarded the consumer and it’s up to the merchant (business) to provide evidence to win it back.

How much do chargebacks cost 

The full amount of the transaction being disputed plus a $15 fee. This amount is charged immediately, at the time of the chargeback.

Tips to avoid chargebacks

• Over-communicate with your members about when they will be charged, for how much, and what services you are offering - especially if your physical location is closed. It can be tempting to not get in touch with that member who bought an annual membership 3 months ago, but it’s more important than ever to get ahead of potential chargebacks.
  
  
• Make sure you always have members sign contracts for any membership or service. Without a contract as evidence, it’s very unlikely that you will in a chargeback. 
  • Note: if your physical location is closed and a member asks for a refund, you should provide it unless you have a new contract specifically stating their agreement to your online service.
    
    
• If you do get a chargeback, provide as much evidence as possible to try to win back the dispute. Here are some more tips on what to provide and How to Manage Chargebacks.

Other best practices

• Ensure you always have sufficient funds in your bank account to cover potential chargebacks. Even if you end up ‘winning’ the chargeback, you will be charged the full amount of the chargeback + the $15 fee when it’s first initiated by the consumer. If you win you will get the amount plus the fee back, but this process can take upwards of 75 days.
  
  
• For that reason, it's better for you as a business owner to issue refunds if you think the member may otherwise attempt a chargeback and you aren't 100% confident in winning the dispute. Especially right now, with COVID-19 forcing businesses to close, it will be more difficult than ever to win chargebacks. 
  
  
• Keep a close eye on your Wodify invoices to monitor chargebacks. We will notify your billing contact email immediately and there will be a banner notification on your Payouts tab and on the top of the affected invoice. Here’s more info on How to Monitor Chargebacks with Wodify Payments.
  
  

Failed Transaction Fees

What it means

Failed transactions, or failed invoices, occur when a transaction is not able to run due to insufficient funds, an expired credit card, or other reason(s).

How much do failed transactions cost 

$.30 per failed credit card transaction and $1.00 per failed ACH transaction. 

Note: These fees are now charged at the time of the transaction, instead of being deducted from a future payout. 

Tips to avoid failed transactions

There are a few things you can do, including limiting the number of attempts an invoice will automatically retry after it fails, using our tagging feature to track invoices, and more. Learn more in the Managing Failed Invoices help article. 

Other best practices

Keep a minimum balance (~$20) in your bank account to cover these costs.

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We hope this helps you get ahead of any potential unexpected expenses and effectively manage & minimize failed transaction fees and chargebacks. 

We are here to help, so if you need ideas, encouragement, understanding of how Wodify can make your life a little simpler, feel free to shoot us a note via support@wodify.com or book a call with our Success Team via 1on1.wodify.com or via Priority Live Chat in your admin account (Promote only).