Accepting credit cards as payment for transactions is an absolute must for any business. Accepting credit cards adds convenience, cost-effectiveness and a professional image of your business while improving productivity and growing your customer base.

If you already accept credit cards, you know that this process is not for the faint of heart. Credit card processing comes with its challenges, although our credit card updater service works to combat some of those.  As the merchant service manager at Motionsoft, I’d would like to discuss one of the most challenging and frustrating parts of this process, the bane of merchants all around the world – chargebacks.

When merchants think of chargebacks the expression “guilty until proven innocent” comes to mind. The credit card industry has made it easier for consumers to file chargebacks and transaction disputes, while the merchants are left with little industry support.

That’s where our team comes in. Motionsoft has nearly 20 years of experience in the credit card industry and specialized experience and training when it comes to chargebacks. How can we help you through this painful, complex and sometimes confusing process?

Let’s start at the beginning.

What is a Chargeback?

The term “chargeback” describes the process that occurs when a customer refuses to accept responsibility for a charge on their credit card. Chargebacks may also be initiated by an issuing bank due to a technical issue such as when no authorization approval code is received. Chargebacks (aka disputes) are obviously something every business owner wants to avoid, as they can result in lost time and revenue. Sometimes it seems that no matter what a merchant does they always lose even with the most ironclad evidence to refute a card member’s claim. So what can a merchant do? First, you need to understand the chargeback process.

The Chargeback Process

The eight-step chargeback process is a very complicated and cumbersome process that involves a number of different competing parties each seeking to remedy the chargeback in their favor. The chargeback process is not quick and can last anywhere from six-weeks up to six-months. I’ve highlighted each step below:

Step 1: The cardholder files a complaint by contacting his or her issuing bank about an alleged erroneous transaction.

Step 2: The issuing bank checks whether the dispute is valid. If the bank finds the request invalid, the dispute is simply declined and the customer is charged with a processing fee.

Step 3: If the issuing bank sees a potential processing error, a provisional credit is provided to the cardholder. The bank then initiates the chargeback process to obtain credit from the merchant’s processor.

Step 4: The merchant’s processor then researches the validity of the chargeback claim. If the chargeback is found to be invalid, they will decline the chargeback and inform the card-issuing bank.

Step 5: When the chargeback is found to meet required processing guidelines, the chargeback amount plus a processing fee is removed from the merchant’s account and the merchant is thereafter notified of the chargeback and provided direction concerning how to address and remedy the dispute.

Step 6: If the merchant feels the transaction is in fact valid, the merchant must promptly respond to the notification with a detailed rebuttal and evidence supporting the authorization for the charge. If the documentation supplied is satisfactory it is then re-presented to the issuing bank to review. The issuing bank also presents the documentation to the cardholder to review. Generally a provisional credit is issued to the merchant during this step. If the information is not deemed satisfactory a rejection notification is provided.

Step 7: It is possible that after a provisional credit is provided to the merchant, the issuing bank may re-dispute the transaction if they are not satisfied with the outcome of Step 6. Depending on the reason for the ongoing dispute and the documentation already supplied relative to the processing guidelines provided by the appropriate card brand, the merchant may be asked to provide additional documentation or may be debited again. Often in these situations, the merchant is advised that there is no further recourse and to work directly with the cardholder to resolve the dispute.

Step 8: If additional information is requested from the merchant, then once provided and deemed satisfactory it will again be represented to the issuing bank with the hope of winning and finally resolving the dispute.
Reasons for Chargeback

As a merchant, you should be aware of the most common reasons why merchants receive chargebacks in the fitness industry. They are:

Cancelled Recurring Transaction

This is the most common chargeback reason code in our industry. On average more than 70% of chargebacks received are for this reason. The cardholder claims to have cancelled their recurring billing for which they have continued to be billed.

Resolution tip: provide a copy of a clearly executed contract containing terms and conditions of cancellation that is acknowledged by the cardholder.



The cardholder claims that a gym or fitness center has billed their account without their authorization.

Resolution tip: provide a copy of a clearly executed contract containing terms and conditions of cancellation that is acknowledged by the cardholder.


Credit Not Processed
Closely related to cancelled recurring transaction, the cardholder claims the gym or fitness center has not credited their account for a cancelled recurring charge.

Resolution tip: provide a copy of a clearly executed contract containing terms and conditions of cancellation that is acknowledged by the cardholder and an explanation of why credit it not due.


There are many other chargeback types but they are seldom seen in our industry. As frustrating as it may seem, the resolution for many chargeback types is basically the same – provide proof the cardholder accepted your terms and conditions. If your facility has records of a different date of cancellation, it is critical to present this information during the rebuttal process.

As a merchant, you already know that the majority of the cancelled recurring transaction disputes are from Visa cardholders. Visa’s guidelines make it very, very difficult to win such disputes. Visa’s position is that once their cardholder advises you of a cancellation that you must discontinue billing the cardholder regardless of your terms and conditions. The other card brands are better about taking into consideration terms of cancellation.

For additional information from Visa on recurring transactions and chargebacks please visit these sites: (see page 49)


Here are a few additional tips:

Continued use of service

In all cases where you have evidence that the cardholder continued to use your services after their claimed cancellation, simply provide emails, usage logs, account notes and any additional information that will assist in defending a dispute.

If you have no record of the members’ cancellation, please mention this during your rebuttal. While your Motionsoft chargeback team will always defend your firm during the rebuttal process, it is important to note that win rates in this situation are rather low.

If you have any questions or need additional information, please don’t hesitate to contact or by calling 1-800-323-1005

Best Practices

As your merchant service representative, we are your voice and advocate in the dispute resolution process. A few best practices are highlighted below to support your defense of chargebacks:

  • Ensure your Terms & Conditions (T&Cs) as well as your refund or cancellation policy is clearly stated in your customer contracts.
  • Have your customers initial or sign on the same page as the T&Cs in addition to any other signature areas on your contract.
  • If your facility utilizes e-signature solutions, it is important to communicate this fact during the entire rebuttal process.
  • Validate that the credit card used to charge your customer(s) is in the name of the member or an authorized user.
  • Any time the rates or any terms and conditions change execute a new contract and have it signed by the cardholder.
  • Please do not respond with pictures of contracts since file sizes may make the delivery of these attachments difficult to send. Instead, create pdfs of a contract.
  • Ensure all documentation is legible.
  • Ensure your rebuttal is detailed with dates, times and location information.
  • Respond to the chargeback as quickly as possible. A limited amount of time is available to resolve a chargeback. If you delay, you may miss your opportunity to fight the chargeback.
  • If you issue a refund do so to the card used in the original transaction.
  • If the credit was issued through another processor please supply the 23/24-digit reference number associated with the credit.

If you have any questions or need additional support don’t hesitate to contact your merchant service manager.