Running a business in the time of the novel coronavirus (COVID-19) is unprecedented. The world is working diligently to prevent the spread and fight this pandemic and it is of paramount importance that we do so. Unfortunately, as a result, our efforts have undesired consequences that will likely have some financial impact on every business to some degree. Between forced business closures and general fear of contracting the virus, consumers have begun to ask for refunds of services that cannot be rendered or goods that cannot be delivered.
In some cases, some of your customers may be submitting chargebacks on payments already made as a way to obtain their money back without having to contact you directly.
Communication with your families is key!
Upfront communication at this time is key to helping prevent this behavior. Whether your classes have been put on hold or you are experiencing mandatory closures of your business, regular communication to your customers is of utmost importance and can help prevent potential chargebacks.
You must state your policy clearly to your customers in regards to payments for classes/events that have been paid for and not yet received. We have some possible strategies listed below. First, let’s make sure you understand what chargebacks are and how they can affect your business – especially during these difficult and uncertain times.
What Are Chargebacks and How Do They Impact Your Business?
A chargeback is a reversal of a credit card payment that comes directly from the bank that issued the credit card to their client (your customer) and is used as a way to forcefully re-obtain money paid to the merchant (you). When a chargeback is filed, the dollar amount being disputed will be pulled from your business bank account and held until the chargeback is settled.
Chargebacks can be issued for many reasons, but the main scenarios are due to fraud or the cardholder claiming that services that were paid for have not been received. The latter scenario is the current concern facing our customers during the COVID-19 pandemic as schools are being forced to close and we are being directed to social distance ourselves from our community.
Chargebacks not only have a direct impact on your revenue, but you also will incur fees for each individual chargeback made against you. Additionally, they require you to spend an extraordinary amount of time to file your side of the disputed payment. If your chargeback situation gets out of hand, the card brands could try to levy a fine against your business or even revoke your payment processing privileges.
Strategies to Help Prevent Chargebacks
Use Jackrabbit’s Email Families feature to reach out to your families and let them know what your plans are and what you are doing to address their concerns. Be sure to ask for their patience and understanding while you navigate uncharted territory with COVID-19.
Offer Different Options to Your Customers
- Virtual learning has never been easier! Offer your classes online so students can continue to learn from you and stay connected with your program.
- Update your makeup policy to give a longer grace period when classes start back.
- Post account credits for future classes in lieu of refunds to encourage families to return when classes resume.
- Offer free events or open gym time when classes are back in session.
Share Your Contact Information
The best way to stop chargebacks is by liberally advertising your contact information (email, website, social media) and encouraging your customers/parents to contact your business in regards to the payments they have made for classes/events they may not receive before taking other action. You want them to call you instead of their bank!
Respond to customer concerns in a timely manner. Providing customer service responses within 1 hour or less via multiple channels can significantly reduce customer frustration and thus reduce chargeback attempts. Additionally, you want to show empathy as much as possible when your customers express frustration to sustain your relationship and minimize instances of chargeback.
We’re Here For You
Navigating the impacts of the COVID-19 can be scary, but Jackrabbit and our ePayment Partners are here to help. If at any time you have questions or concerns please reach out to your ePayment Partner. You can find the contact information for your provider under Tools>ePayment Settings>Credit Card & Bank Account Settings in your Jackrabbit application.