One of your members has chosen to pay for their purchase by card, but the payment has been rejected by the bank and the amount has been refunded. How can you prevent this and track it in your accounting? That's what we'll see in this article.
- Rejections & Chargeback: Causes and Consequences
- How to be notified?
- Is there any payment monitoring?
- What you can do in case of rejection
Rejections & Chargeback: Causes and Consequences
What is a chargeback?
A chargeback is a refund process for purchases made using a credit card, direct debit, or bank transfer.
It allows card or bank account holders to dispute a transaction and request a refund from their bank if they believe they have been a victim of fraud or no longer agree to a payment.
Two types of chargebacks exist, depending on the payment method used:
- Direct Debit â instead of stopping a payment online, the person stops the direct debit with their bank.
- Credit card â the person requests a refund for a purchase due to a stolen or lost card. This rejection is rare because it is only possible if there was no 3D Secure procedure. But it is still possible for installment payments or for amounts where the bank does not require 3D Secure.
What is the impact on Accounting?
Here's what happens on the Accounting and Online Account side in case of rejection:
The payment has been refunded but the debt - which was paid, then is no longer paid - remains.
From an accounting standpoint, the contact still owes you $100.00.
Rejections are rare, but they can happen. They can be financially penalized.
How to be notified?
For each rejected payment, you will receive a notification:
- to the email address specified in the configuration of your form;
- to the email addresses of the main administrators of the organization.
You can also see it in the transaction details or in your online account operations.
âšī¸ Sometimes it's an error on the contact's part, so we do everything we can to provide them with as much information as possible about the upcoming payment. In the case of recurring donations or membership renewals, we send them an email so that they can contact you directly to discuss it.
Is there any payment monitoring?
As we are committed to maintaining a constant and secure service, we constantly monitor payments made on the platform.
In case of an abnormal rate of rejected payments, we are immediately informed, and our compliance team conducts thorough checks. In this context, our teams may call you to understand and reduce these rejections.
What you can do in case of rejection
From an accounting perspective, when there is a rejection, the debt is reopened: the contact owes you money.
So, you have two options:
- Cancel/abandon the debt
- Follow up with your contact to request the owed money
Cancel/abandon the debt
- Cancel the debt by making a cancellation entry like this:
2. On the Payables and Receivables tracking page, your initial debt and the cancellation will be displayed. Group them together to reconcile the debt with the cancellation. More details here.
Follow up with the contact to request the owed money
- Identify the contact
- Send them a message
- Once the money is received, record the payment in your accounting to settle the debt
For further information:
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