Your top priority as a business owner is to increase sales and generate revenue. But once you build a business with consistent revenue, other questions start to break your focus. How do I deal with refunds? How do I not let chargebacks impact my business? How do I deal with fraud?
None of those questions are inherently exciting, but to enable you to do the exciting creative work, you need to take care of your bottom line. Teachable has invested time to create a payment gateway that not only makes it easy to sell, but also helps you tackle chargebacks and fraud. We’ll show you how we’re working with you to fight chargebacks and with risk detection.
As a business, you never want to get a chargeback—whether you’re just selling one or a dozen courses. It’s time consuming to dispute the chargebacks and you lose the sale and additional chargeback fees. On top of that, the standard industry maximum for chargeback rates is 1% of monthly transactions, which can be quite difficult for creators who are just getting started.
That’s why with our native payment gateways, teachable:pay and Monthly Payment Gateway, we’ve added additional features to support our creators, small or large. With our native payment gateways, we have helped our creators keep an average chargeback rate of 0.18-0.20% in the last 6 months, lower than most companies that average at 0.50%. Here’s how we do it:
When you sell your courses with our gateways, we require our creators to enforce a 30-day refund policy. This not only gives you the option of offering a no-risk guarantee on your product, but it also reduces chargebacks from any potential dissatisfied student.
Instead of waiting for a chargeback on a fraudulent charge, we added a feature that allows you to tackle this in advance. Stripe, the service Teachable uses to process card payments, describe potential fraud warning as:
Notices generated by card issuers to flag payments that are suspected to be fraudulent. An EFW is created when a cardholder lodges a claim of fraud with their issuing bank and occurs before an official chargeback.
Whenever a transaction triggers a potential fraud warning, you will receive an automated email letting you know which transaction it is and what next steps you can take. In addition to the automated email, you can also filter your sales with the “Potential fraud” tag directly in your admin.
To prevent potential chargebacks, you can proactively reach out to these students to ensure they’ve intended to purchase this course, or automatically un-enroll them and refund the charges.
In addition to the potential fraud warning, our risk team also looks for “bad actor” behavior that might cause potential harm to our creators. To track these behaviors, we look at the student’s submitted email, timestamp, transaction, and more to see if there’s a trend of the purchaser testing stolen credit cards. Once these bad actors have been identified, their emails are added into our block list which prevents them from purchasing any courses hosted on Teachable, thus reducing any potential for future chargebacks for you.
Unfortunately, you can set your course and payments up correctly and still get hit with a chargeback. If you do get a chargeback, we have a process and team that will help increase your chances of winning the dispute in your favor.
When you sell your products using our native payment gateways, Teachable automatically disputes the challenge on your behalf with the information we have: product ID, course ID, course owner, and time and date of the course purchase. Because timely response and dispute evidence are important, this minimum supply of information generally results in a favorable chargeback win rate.
In addition, we also send you an email whenever you get a chargeback. You have the option of disputing the student chargeback with any additional information you have. This can include communication with the student, engagement from students within comments, or more. With this process, our win-back rate is around 30%, on average 8% higher than the industry average.
One of the benefits of using our native payment gateways is that we manage the chargeback ratio in aggregate of all the creators running their business on our platform. This means even with a monthly maximum of 1% chargeback rate threshold, we can incur more chargebacks than a single small business owner.
Let’s break it down:
Example A: A course business owner who just started selling courses and has 100 transactions in one month, two of which are chargebacks. This means business owner A now has a chargeback rate of 2%, which is over the threshold.
Example B: An established course business owner, who consistently has 1,000 transactions every month, also has two chargebacks. Business owner B is well under the chargeback rate threshold at 0.2%.
This is how the chargeback rate can have much bigger effects on smaller creators. Now, let’s say both owner A and owner B both use Teachable’s native gateway. Together, in one month, there are 1,100 transactions and four chargebacks, bringing the chargeback rate threshold to 0.3%, which is still well below the maximum threshold.
Our payment gateways allows us to give smaller creators who are just getting started more room and flexibility to manage their business and reduce chargebacks. Our risk team oversees the daily chargeback rates and reaches out to creators personally to let them know about their chargeback levels and offers tips to reduce them.
Teachable:pay and our Monthly Payment Gateway is the best way to accept payments for your digital products—not only because you can accept all major payment methods, but also because we invest in the less exciting parts of running a business such chargebacks and risk detection with fraud. We help you squash the little things, so they never become too big to handle.
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