Managing Chargebacks and Online Payment Suspensions

One of your members paid by credit card or SEPA Direct Debit, but the payment has been disputed and the amount refunded. How can you protect yourself — and track it in your accounting? That's what we'll cover in this article.

• Chargebacks: causes and consequences
• How will you be notified?
• Is there monitoring on payments?
• Next steps: what you can do when a chargeback occurs

Chargebacks: causes and consequences

What is a chargeback?

A chargeback is a refund process for purchases made by credit card or SEPA Direct Debit.

It allows cardholders or bank account owners to dispute a transaction and request a refund from their bank — for example, if they believe they were the victim of fraud or if they no longer agree with a payment they made.

There are two types of chargebacks, depending on the payment method used:

• SEPA Direct Debit (the most common type of chargeback)
  • Instead of canceling an online donation, the person retroactively stops the direct debit through their bank;
  • The bank account is closed and/or the mandate is no longer active.
• Credit card
  • The person requests a refund for a purchase due to a stolen or lost card;
  • This type of chargeback is less common, as it is only possible when no 3-D Secure process was used. However, it can still occur for installment payments or for amounts where the bank does not require 3-D Secure.

What is the accounting impact of a chargeback?

Here is what happens on the accounting side and in your E-wallet when a chargeback occurs:

The payment has been refunded, but the receivable — which was settled and is now open again — remains outstanding.

From an accounting standpoint, the contact still owes you $25.

What does this mean for you?

Chargebacks are rare, but they do happen.

They come at a cost, given their impact on all the parties involved (banks, payment processors, etc.).

Each chargeback is charged to you at $15.

How will you be notified?

For every chargeback, you will receive an alert:

• to the email address set in your form's configuration;
• to the email addresses of the organization's primary Administrators.

You can also view it in the transaction details or in your E-wallet transactions.

ℹ️ Sometimes a chargeback is simply a mistake on the contact's part. That's why we do our best to give them as much information as possible about the upcoming payment. For recurring donations or membership renewals, we send them an email so they can reach out to you directly if they'd like to discuss it.

Is there monitoring on payments?

Maintaining a reliable and secure service is a top priority for us, which is why we continuously monitor all payments processed on the platform.

If an abnormal chargeback rate is detected, we are immediately notified and our compliance team carries out a full review. As part of this process, our team may reach out to you to understand the situation and help reduce future chargebacks.

Next steps: what you can do when a chargeback occurs

On the accounting side, when a chargeback occurs, the receivable is reopened — meaning the contact owes you money again.

You have two options:

• Write off the receivable;
• Follow up with your contact to collect the amount owed.

Writing off the receivable

1. Write off the receivable by posting a reversal entry as shown below:

   

2. On the receivables and payables tracking page, both the original receivable and the reversal entry will be displayed. Group them together to match the receivable with the reversal. More details here.

Following up with your contact to collect the amount owed

1. Identify the contact;
2. Send them a message;
3. Once payment is received, record it in your accounting to close out the receivable.

Learn more:

• Online payment tracking
• How installment online payments work for memberships, events, and the online shop

📘 Check out our complete guide to online payments on Springly.