A chargeback happens when a cardholder contacts their bank or credit card company to dispute a transaction. If the claim is valid, the bank reverses the payment and deducts the funds from the merchant's account with the chargeback fee. You can either accept the chargeback (treat it like a refund) or dispute the chargeback. If you submit documentation to dispute the chargeback, we will forward your response to the issuing bank. The issuing bank is responsible for reviewing your rebuttal to the chargeback and making the ultimate decision to reverse or allow the Chargeback to stand. If the issuing bank decides to reverse the chargeback, they will remit the funds through the payment system to be deposited back into your processing account (this can take several days to complete). While chargebacks protect consumers from unauthorized or fraudulent transactions, they can be challenging for merchants, often resulting in lost revenue and fees. If you have further questions, contact our Support Team.
Businesses often face chargebacks for reasons such as:
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Fraud: The customer claims the transaction was unauthorized.
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Product/Service Issues: The customer was unhappy with the quality or delivery of goods or services.
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Merchandise/Service Not Received: The customer claims they did not receive the product or service they paid for.
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Customer Confusion: The customer doesn't recognize the charge on their statement.
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No Refund Policy Disputes: The customer disagrees with or was unaware of your business policies.
Vagaro does not initiate a chargeback and does not have control over the final decision. We will assist you in submitting your rebuttal to the chargeback. When submitting your dispute, we prepare the information that is stored on our system as part of your rebuttal. If you do not accept or dispute the chargeback in time, we will submit the documentation that we have access to on our systems related to the transaction in response to the Chargeback. There is no guarantee this information will be sufficient on its own to win the rebuttal.
The timeframe from when the chargeback is filed and the time limit for you to dispute is short, so it's important to be vigilant. The timeline from when a chargeback is filed to when you need to dispute a chargeback is as follows:
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File a Chargeback: Depending on the card network (Visa or MasterCard), customers typically have 120 days from the transaction date to file a chargeback.
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Business Dispute: Once a chargeback is filed, your business is notified in Vagaro, and the original transaction amount plus the chargeback fee is deducted from your next deposit. Once notified, you have around eight days to dispute; otherwise, a dispute will automatically be submitted to you. The timeframe may differ depending on the card network. Businesses in the United States may have their chargebacks auto-defended by our processing partners in some circumstances. Auto-defended businesses will receive a provisional credit covering the amount disputed by the customer.
Note
If your chargeback isn't automatically defended, businesses that dispute a chargeback themselves may receive provisional credit in some cases, especially with MasterCard card holders.
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Bank Investigation: The customer's bank reviews the evidence submitted by both parties and will decide whether to uphold or reverse the chargeback. This process can take weeks or months to process.
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Dispute Resolution: If the customer's bank rules in your favor, the amount disputed will be deposited back into your account with your daily batch deposits. The chargeback fee will not be refunded. If you lose the dispute, any provisional credits will be deducted from your deposits.
To prevent chargebacks, it's important to ensure that the customer has authorized any and all transactions made with their credit card. However, even with your best efforts, there will be a time when a customer charges back a transaction.
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Be Proactive
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Clearly inform customers about your return, refund, and cancellation policies at the time of sale. Vagaro automatically does this for online bookings when you write your policies, but you should also post them visibly in-store.
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Request customers to sign a form acknowledging your cancellation policy.
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Always try to dip or tap a card during the point of sale. A card-present transaction typically has lower fees and is deemed less risky. Try to limit manual entries (typed-in) and swiped transactions as much as possible.
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Ensure you have a clear Doing Business As (DBA) name listed on your merchant account, which you chose when you first signed up for credit card processing and appears on your customer's bank statement. A customer may charge back the transaction if they don't recognize your business. You can change your DBA in your merchant account.
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Respond to customer complaints before they result in a chargeback. Even with a “no refund” policy, chargebacks can be initiated if customers feel if they feel they were treated unfairly. To mitigate these disputes, offer alternative resolutions, such as store credit or exchanges.
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Immediately respond to requests to cancel recurring payments for memberships and packages.
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Charge a deposit instead of a no-show fee. If you charge a no-show fee, customers can dispute it and say they didn't authorize the transaction. Deposits are taken before the appointment and are like a written contract with the customer. If they don't show up to their appointment, you can keep the deposit.
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Respond quickly to any customer chargeback claims to avoid missing the dispute deadline, which is about eight days after you receive the chargeback notification in Vagaro.
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Collect Documentation
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Save any communication with the customer, such as emails, text messages, or call records that show the customer's intention.
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Save any receipts and documentation of the purchase, which can later be used as evidence when you dispute the chargeback. You can view a customer's receipt in the Transaction List
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Show proof of delivery for products, like shipping confirmations, tracking numbers, or delivery signatures. The Shipping Report can be used to track product shipments.
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Show any service agreements in forms or business policies that document terms and conditions agreed upon by the customer.
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Vagaro's processing partners charge chargeback fees to cover costs associated with handling disputes. While these fees may feel burdensome, they encourage businesses to take preventative measures against disputes. The chargeback fee differs by country:
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United States: $7.50
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United Kingdom: £0
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Australia: $0
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Canada: $20
Important
In some cases, businesses may receive reversal credits for impounded funds. If your defense fails, MasterCard charges a $15 schema fee, withdrawing the provisional credit from your account. This fee applies only to chargebacks from MasterCard cardholders, not other reversals.
Comments
4 comments
How many days does it take for the money to return to my account after I win the case and the status changes to won?
Hi Ruth, the funds should be returned to your account by the next deposit date. Please see our batch schedule for more information.
Thanks,
Jamie
Why are there 2 chargebacks on my report for the same dispute on different dates?
Hi Rosa, I recommend contacting our support team to help troubleshoot this with you.
Thanks
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