Home Improvement

chargebacks
Home Improvement contractors, by volume, make up the largest demographic of businesses that we service. From a processing standpoint, these businesses represent a niche market that most processors and merchant services providers aren’t equipped to service properly. The majority of their transactions are both card-not-present and high-dollar tickets – either one of which by themselves poses a lot of risk to the processors and acquiring banks – so you can imagine the extreme risk that comes with a transaction that is both. What risk specifically? Chargebacks.

A chargeback occurs when a cardholder or their bank dispute a charge because they suspect it’s fraudulent. This can be a transaction that wasn’t authorized by the cardholder because someone stole their card and used it, or because a merchant ran a transaction without the proper authorization.

This could also occur when the goods or services fail to live up to the customer’s expectations. This is where most chargebacks fall with regards to home improvement contractors. While the chargeback mechanism was designed to protect cardholders from fraud, it is often being used as a customer service tool when the customers aren’t happy. There’s a bit of a gray area with regards to this. Let’s say that a customer pays a premium for high end paint for a project, and it’s documented on the agreement. But the contractor buys the cheapest paint available to save money and pad their profits. Does the customer have the right to issue a chargeback? Absolutely. The product/service that was delivered is not what was agreed upon. Now, let’s run that same scenario again. This time, the customer isn’t happy with how the final color looks once it’s dry. They chose the specific paint and the color and the contractor did exactly what was agreed to, but upon seeing the finished product the customer is not happy. Does the customer have the right to issue a chargeback? Technically no, but in many cases they will anyway. These are the scenarios where contractors are often getting burned by consumers’ chargebacks. This is why it’s imperative to document everything – literally everything.

We offer chargeback assistance to our clients at no additional cost. When a chargeback happens, we’ll be notified from the processor. We will then notify our client and collect all the documentation for this particular transaction. Next, we’ll get our client’s side of the story to understand what happened, and then we’ll craft and submit the response letter on behalf of our client to dramatically increase the chances of them getting their money back.

The reason many processors don’t handle these kinds of large transactions efficiently is because of the risk of chargebacks. A merchant is liable for a chargeback for 120 days from the date of the transaction or the delivery of goods/services – whichever date is later. That’s for Visa and Mastercard. For American Express and Discover, they’re on the hook for an entire year. The acquiring banks and processors are worried because if the merchant doesn’t have those funds to cover a chargeback, if it’s concluded that they merchant is at fault and the funds must be refunded to the cardholder, the processor and acquiring bank that authorized the transaction is on the hook to pay back the customer. Thus, the larger the transaction, the greater the risk posed to the bank – and home improvement projects are typically large transactions.

Elavon, our processor, has won the Processor of the Year award from the CNP Awards for three years running because of their efficiency in handling large transactions, minimizing funding delays, and handling chargebacks in the best interest of their clients.

technology
Our Magothy Payment gateway offers the technology to make it easy as possible for home improvement contractors to collect payment from their customers while also minimizing the risk of chargebacks.

The platform has a Customer Vault that allows the merchant to store their customer’s payment information securely and in accordance to PCI Compliance standards. This is a convenient way to save time when it comes to future payments. When collecting the 1/3 deposit up front, the contractor can then create a billing profile for that customer with the payment information saved so that when the project is completed, they can bill the card on file and not have to chase payments. We can also assist in providing the proper authorization forms to make sure the merchant has all the proper documentation to do so.

Our gateway also has the ability to send payable invoices directly from the dashboard. These invoices come with a secure link in the email for the customer’s specific invoice and captures their IP address when they submit payment. Once the transaction has been made, it will close out that invoice and email a notification to the merchant that a payment has been made. If the merchant already has an invoicing platform that they’re using, we can setup a hosted payment page on their website for customers to pay the invoices sent to them from another source. We also have an integration with QuickBooks desktop that can automatically reconcile transactions with open invoices.

Because of the level of service we provide when it comes to chargebacks and the technology available to our merchants to collect payments easily, we believe that we offer the best credit card processing solution for home improvement companies. We often work with the following contractors: