How eContracts Can Increase Chargeback Wins by 67% | Soar Payments LLC

How eContracts Can Increase Chargeback Wins by 67%

At Soar Payments we provide high risk merchant accounts, which means that controlling chargebacks are often among our customer’s highest priorities. The reasons that businesses care about chargebacks are obvious:

  • Chargebacks are expensive, both in fees, and lost revenue.
  • Chargebacks are time consuming from a labor perspective.
  • Too many chargebacks will get a merchant account terminated.
  • Ethical principles, nobody likes getting scammed for free service or products.

Most Businesses Aren’t Actually Winning Chargebacks

Unfortunately, avoiding, fighting and winning chargebacks is not a simple process, particularly for small and mid-sized merchants who don’t have a person dedicated to learning the nuances of the chargeback process. And so, most small businesses just don’t fight chargebacks at all. In fact, only 60% of chargebacks are disputed by merchants (and that 60% is heavily weighted to large merchants), and only 41% of disputed chargebacks are won by the merchant. In summary, that means that… [bctt tweet=”On average, the customer has a 79% chance of winning when they issue a chargeback.”] Many of those wins by customers are legitimate, but unfortunately, millions of dollars are lost by merchants each year for illegitimate chargebacks.

To make the process of fighting (and winning) chargebacks easy for small merchants, at Soar Payments we’ve offered, from our founding, simple hassle-free solutions that are fully integrated with our high risk merchant accounts. In this article, we’ll tell you about a simple technique that we’ve incorporated, which has had a profound effect on chargeback ratios of our merchants, using compliant electronic contracts.

What is a Customer eContract?

A customer eContract is simply an electronically signed contract, that you email (or text) to your customer to quickly sign as a part of the transaction. The customer signs by opening their email (or text) and typing their name in.

Without a signed contract like this, if you own a service business, you’re at a big disadvantage when fighting a chargeback because you have no real evidence that the customer received the service, understood the pricing, understood the refund policy, and was satisfied with the service. It’s simply your word against theirs, and usually the merchant loses in that situation.

By contrast, an eContract is is a fully legally enforceable contract, and in a chargeback dispute (when done correctly) a signed eContract provides the same level of protection for you as the merchant as would a signed restaurant bill, for example.

There are a number of companies that will send an track eContracts for you. You can use a service like DocHub at $4.99 – $6.99 per month or DocuSign at $10.00 – $25.00 per month.

What your Customer eContract Needs to Include

But just sending a random eContract that lists pricing and the refund policy isn’t going to help you much.

Instead, when fighting a chargeback you (if you do this yourself) or your chargeback management platform (if you, like our merchants, use a chargeback management system) will need to send your credit card processor a copy of a compliant eContract. Specifically, you’ll want your eContract successfully address the following credit card processor questions…

  • Proof of a valid sales transaction receipt sent to cardholder.
  • Proof that merchant properly disclosed its refund policy for returned merchandise or service cancellation upon delivering the merchandise or service.
  • Proof of a signed contract or statement of refund policy.
  • Proof of documents to prove that cardholder was informed about cancellation policy.
  • Proof that returned merchandise was not received by the merchant.
  • Proof that recurring charges was within reauthorized amounts and proof that you sent the cardholder 10 days notification in advance.

The most straightforward way to accomplish this, for service businesses in particular, is to have your customers electronically sign a document at the time of the transaction and make sure what they sign meets those standards.

How Effective are eContracts in Winning Chargebacks?

We’ve seen chargeback win rates for service based merchants increase from 25-30% all the way up to 85-95% once these electronic contracts are used. Why? Because service based businesses don’t have the easy proof that eCommerce businesses do (delivery confirmation), or that retail businesses do (a signed receipt), but a signed eContract with the customer provides exactly that.

[bctt tweet=”Using effective eContracts can raise your #chargeback win rate from 25% to 95%.”]

Free downloadable ‘battle tested’ eContracts

Below are a few eContracts for industry types that our chargeback management partners provide to merchants, as a sample guide for developing their own compliant eContracts. Add your name and email below and a free copy in Word format will be emailed to you.

General Sample eContract

Sample general customer electronic contract.
[contact-form-7 id=”4898″ title=”eContract Sample”]

SEO Web Dev Sample eContract

Sample customer eContract for SEO, web design, web dev industries.
[contact-form-7 id=”4898″ title=”eContract Sample”]

Tech Support Sample eContract

Sample customer eContract for remote technical support industry.
[contact-form-7 id=”4898″ title=”eContract Sample”]

Credit Repair Sample eContract

Sample customer electronic contract for the credit repair industry.
[contact-form-7 id=”4898″ title=”eContract Sample”]

Debt Collection Sample eContract

Sample customer eContract for debt collection industry.
[contact-form-7 id=”4898″ title=”eContract Sample”]

Credit Repair Sample eContract

Sample customer electronic contract for the credit repair industry.
[contact-form-7 id=”4898″ title=”eContract Sample”]

Disclaimer: We are providing these sample eContracts for informational purposes only, and do not attest as to their effectiveness for any individual business. Moreover, Soar Payments encourages all businesses to work with disgruntled customers in good faith first, and only resort to the chargeback and re-presentment process when amicable resolution cannot be achieved.