One of the best-kept secrets in the beauty and wellness industry is chargeback protection. A chargeback is when a credit card company returns money that had been paid to a merchant – usually because the client/credit card holder claims there has been fraudulent activity on the card.
While chargebacks are unusual, they aren’t rare, and the amount of money involved in the dispute can range, depending on the service. According to data collected over the last five years, chargebacks are responsible for a loss of anywhere between 2% and 7% of your profits – which means you could be losing thousands of dollars a year to chargeback disputes.
Unfortunately, in the salon and spa world, there aren’t many good reasons a client would issue a chargeback. The vast majority of chargebacks are issued because the cardholder has noticed or claimed fraudulent transactions. They report the fraud to the credit card company, who then demands that the merchant involved in the fraudulent transaction accept a loss for the money spent.
However, there are other reasons a client could issue a chargeback. There could be a misunderstanding between service professional and client about the outcome of an appointment, cost of a service, or even the scope of the service they received.
Professionals commonly deal with chargebacks when a client has unrealistic expectations on the outcome of their service – for example, they had box-dyed black hair and wanted to go platinum blonde in one session, or they thought their old tattoo would be completely gone with just one laser session. In these situations, the business owner will be expected to argue their case and provide evidence that the transaction was legitimate.
Chargeback protection is a resource meant to cover you financially against payment disputes. If the bank rules against your business, the disputed funds are returned to your client.
Chargeback protection takes proactive measures to fight on your behalf when chargebacks happen, and protect your hard-earned profits – even if the bank rules against you.
You work hard for your income – it should be protected! A single chargeback can result in hundreds of dollars in lost revenue, not to mention the time you invested in providing the service and arguing with the credit card company. Chargeback protection keeps your money in your pocket, where it belongs.
Credit card companies are much more likely to side with their customers (some estimate that the average win rate for merchants is just 30%), meaning many beauty and wellness professionals who have received a chargeback will be fighting an uphill battle to keep their profits.
Fortunately, there are steps you can take to protect yourself and your business from client chargebacks, whether fraudulent or not.
Some clients will issue a chargeback for a cancellation fee – they claim to their bank that, since service was never rendered, they shouldn’t have to pay. Fortunately for you, stating your cancellation policy clearly on your website can protect you from losing a dispute this way. Make sure you require clients to acknowledge your cancellation policy when they book for ultimate protection.
Pro tip: Some areas don’t allow service providers to take a cancellation fee of more than 50% – check the local laws in your area before setting your policy to avoid being in violation!
For fraud claims, it’s simple: If you can prove to a credit card company that a client received the exact service they booked, or that the risks, scope, and outcome of the booked service was explained to them before beginning, you are significantly more likely to win the chargeback dispute.
Quickly and easily add forms and waivers to your booking process with just a few taps on your phone: With GlossGenius Gold, your forms and waivers are automatically integrated with your booking site, and unique to each service, so you can rest assured you’re protected from liability.
When clients issue a chargeback against you, they know their credit card company is going to fight for them – but who’s going to fight for you? If you use a third-party money transfer app to collect payments, you could be left high and dry.
Protect your profits by taking payments with a card reader, or by using Tap to Pay on iPhone. These payment methods are more reliable, because they provide a digital footprint that proves the client’s card was physically present during the payment.
Want to be extra secure? With GlossGenius Gold, you’ll receive 100% chargeback protection for transactions made with a card reader or through Tap to Pay. That means even if the bank rules against you, GlossGenius will cover the loss. (Your money is fully protected!).
Chargeback protection is an invaluable asset for beauty and wellness professionals, safeguarding them from the financial, operational, and reputational risks associated with chargebacks. Implement proactive measures and leverage advanced chargeback protection – because when it comes to your income, you can never be too protected.
In the dynamic world of beauty and wellness services, chargeback protection is not just a luxury – it’s a necessity. Embracing this essential shield can empower professionals to focus on their craft, build a loyal customer base, and thrive in an industry where customer satisfaction and financial stability go hand in hand.