Overview
While payment reversals are uncommon, it's important to understand how they work before you begin accepting payments through Handoff.
Whether your customer pays by credit or debit card or by bank transfer (ACH), there are situations where their bank can reverse the payment after it has been made. This article explains the different types of payment reversals, what to expect if one occurs, and how to protect your business.
What Is a Payment Reversal?
A payment reversal occurs when a customer's bank pulls back funds after a payment has already been processed.
The type of reversal depends on how the customer paid:
Card payments: The reversal is called a chargeback.
Bank (ACH) payments: The reversal is called an ACH return.
Although the processes are different, both result in the payment being reversed while the bank reviews the situation.
Card Chargebacks
A customer can dispute a card payment with their bank, sometimes months after the original transaction.
Chargebacks may happen because:
The customer believes there was an issue with the work performed.
The customer does not recognize the charge on their statement.
The payment was made in error or is otherwise disputed.
If a chargeback is filed:
The disputed funds are temporarily held.
You'll receive a notification in Handoff.
Upload documentation that shows the work was authorized and completed.
The customer's bank reviews the evidence and makes the final decision.
Bank (ACH) Returns
ACH payments can also be reversed, typically sooner than card payments.
Common reasons include:
Insufficient funds in the customer's bank account.
The customer claims the payment was not authorized.
ACH returns follow a different process than card chargebacks.
If you receive an ACH return, contact the Handoff team as soon as possible. We'll explain what happened and help you understand your available options.
What to Do If You Receive a Reversal
If you receive a chargeback or ACH return:
Contact the Handoff team immediately.
Review any requests for documentation.
Submit all requested information as quickly as possible.
Many payment disputes have strict response deadlines. Missing a deadline can result in an automatic loss, so responding promptly gives you the best chance of a successful outcome.
How to Protect Yourself
Good documentation is your best defense if a payment is ever disputed.
For every job, keep copies of:
A signed contract or approved change order.
The itemized invoice.
Proof that the work was completed, such as photos, signed completion forms, or delivery confirmation.
Text messages or emails discussing the work or payment.
Keeping these records together makes it much easier to respond if a dispute occurs.
Best Practices for Large Payments
For unusually large payments, consider waiting until the payment has fully cleared before spending the funds.
It's also a good idea to maintain a financial cushion until:
The work is complete.
The customer has signed off on the project.
Any potential payment issues have passed.
This can help reduce the impact of a payment reversal if one unexpectedly occurs.
Additional Notes
Payment reversals are uncommon.
Most disputes can be resolved more effectively when you have complete documentation.
Card chargebacks and ACH returns follow different processes.
Contacting Handoff as soon as a reversal occurs gives you the best opportunity to respond successfully.
Troubleshooting
I received a chargeback notification.
Upload any requested documentation through Handoff as soon as possible, including your contract, invoice, proof of completed work, and any customer communications related to the job.
I received an ACH return.
Reach out to the Handoff team immediately. ACH returns are handled differently from card disputes, and we'll help you understand the next steps.
I'm not sure what documents to provide.
If you're unsure what information is needed, contact the Handoff team through the in-app chat. We'll help you gather the appropriate documentation and explain the response process.