September 28, 2017 by Mitch Taube Categories: Document Management, Document Scanning

What is a chargeback and why do they occur?

When someone sees a charge from your restaurant on their credit card bill, and decides to dispute it by contacting their credit card provider, that’s known as a chargeback claim. When a customer files a chargeback claim, the burden of proof falls to the restaurant owner, forcing you to produce the actual credit card receipt in question, signed by the customer.

This can be tricky, because chargebacks can be initiated for up to 18 months after a charge was transacted. And while a chargeback can sometimes be a legitimate dispute from someone who did in fact patronize your restaurant, they often happen for illegitimate reasons as well. These include:

  • Confusion or forgetfulness on the customer’s part
  • Dissatisfaction that could have been handled on the customer service level
  • Outright fraud (Avivah Litan, an analyst at Gartner, estimates that 20 percent of disputes involve fraud)

For these reasons, getting into the habit of not disputing chargebacks can prove to be an expensive liability for your restaurant. Yet for most restaurants, fighting chargebacks is far from easy and cost efficient.

The challenges of disputing chargebacks

Disputing chargeback claims is especially difficult for restaurants for several reasons:

  • Customers can initiate chargebacks up to 18 months after a purchase
  • Restaurants have limited office and storage space which is often already cluttered, making it very difficult to make additional room to store receipts (restaurants with multiple locations can fill dozens of boxes in a single year)
  • Having too many boxes lying around makes employees work slower and less productively and creates dangerous working conditions, including fire hazards
  • Knowledge workers often waste valuable time on the clerical task of hunting down receipts, which is not the best use of their time
  • Labeling and tracking receipts becomes extremely challenging with limited administrative staff, making it even more difficult to find receipts and respond to a charge back in the allotted time

How do I prevent or minimize chargebacks?

Use secure offsite credit card receipt storage to streamlines the chargeback dispute process.

To help you offset the hurdles involved in chargeback management, we offer secure offsite storage and retrieval of all of your restaurants’ credit card receipts. This value added service removes many of the headaches of challenging a chargeback claim and more.

How it works

  1. You send us all of your physical credit card receipts; we accept them on a daily, weekly, or monthly basis, depending on volume
  2. We inventory your boxes and enter them into our proprietary tracking system for fast location and retrieval whenever you need a particular receipt
  3. All of your receipts are stored in our secure SOC 2 Type 2 storage facility, equipped with security cameras, card access doors, fire sprinklers, alarms and other security systems (for maximum security, our facility is staffed with HIPAA compliance trained employees)
  4. When you need a signed receipt in order to dispute a chargeback, you simply fill out an electronic form; then, we quickly retrieve the corresponding box, locate the exact receipt in question, scan it and deliver it to you in a timely as well as secure and encrypted manner

What are the benefits of receipt management?

It eliminates the clerical work on your end, makes your staff happier and more productive and helps to ensure you don’t lose unnecessary revenue to illegitimate chargebacks. You also save (and in many cases regain) valuable space, increase your staff’s productivity, prevent health and fire hazards, and reduce your liability.

Bonus benefit #1: Prevent identity theft

Storing your credit card receipts in our secure offsite facility also provides you with a safer alternative to storing paper receipts onsite – a situation which can contribute to exposing your clients to identity theft. This can potentially be a major source of liability for your business, especially if you don’t currently keep credit card receipts locked up in a special designated room with limited employee access (as the FTC recommends).

Bonus benefit #2: Stay prepared for tax audits

Remember, in order to be prepared in the event of a tax audit, it is recommended that your restaurant stores credit card receipts for 7 to 10 years. Since restaurants have limited square footage which is better devoted to food and beverage sales, eliminating any unnecessary storage space by not having to stockpile your credit card receipts can prove as profitable as it is convenient.

Tired of being unprepared to deal with chargebacks and audits at your restaurant? Contact us to learn more about the benefits of outsourcing your receipt management!

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