Club Automation
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April 17, 2020
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Finance
COVID-19
category
minute read
April 17, 2020
During the global COVID-19 outbreak, many clubs and gyms of all kinds have been forced to close their facilities and face unique financial challenges, especially around cash flow and processing payments.
The industry will recover strongly, but one of the realities that clubs will likely face in the coming weeks is a spike in chargebacks. Many clubs and gyms either don’t pay attention to chargebacks or rarely experience them. The reality is that chargebacks are a two-sided pain point. Not only do you lose that money from the paying customer, but you also get hit with chargeback fees on the payment processing side for the dispute happening.
Below, we’ll go over some details about what a chargeback is, what the dispute process looks like and how you can best protect yourself against losing that revenue.
A chargeback is any transaction that has been disputed by your customer for being unauthorized or incorrect. All a customer needs to do to start a chargeback dispute is contact their bank or financial institution and let them know those funds should not have been withdrawn. Usually, customers have 90-120 days from the date of purchase to start the dispute.
The most common reasons you’ll see as a club are:
These steps should help paint the picture for chargeback processes:
Regardless of COVID-19 occurring or not, having too many chargebacks initiated against your business can be damaging. The only change is that processors have a stronger eye specifically on health clubs and gyms right now since most have closed their doors in some way.
Generally speaking, if the ratio of chargebacks you experience in a given month is greater than 1% of your total transactions (whether by transaction count of volume), your organization will be considered a higher risk, which could lead to:
VISA is the main culprit behind monitoring the chargeback threshold, and they can take aggressive steps to make sure your club gets back on track.
Note : VISA is decreasing the chargeback threshold to 0.9% effective October 1.
The way payment processors underwrite you is all a game of risk. If your business or industry experiences a lot of fraudulent activity, high refund rates or chargebacks, you are considered higher risk by processors, who need to make sure they financially protect themselves, too. If the processor needs to recover funds from a chargeback dispute from your business, and you don’t have enough money in your merchant bank account, the processor could ultimately be liable for those funds.
Here are some proactive practices you can use to help mitigate the risk:
Feeling overwhelmed at the thought of navigating stressful chargeback processes? We hear you, and we've got you covered. We offer a service that involves proactively updating card account information and providing comprehensive member billing support to make your life easier. Reach out and book a consultation below.
And for daily content updates like this, check out our Rapid Recovery Toolkit.
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A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!
A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!
A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!
Into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!