We Are Sunshine

Access Denied: Salvaging declined EFT transactions

Thursday, February 8th, 2024

People of all walks of life rely on EFT to take care of their expenses, and most salons have acknowledged that by offering discounts for memberships that utilize automatic payments. For salons, this has the added benefits of regulating revenue between seasons and reducing the amount of buying decisions a client has to make.

Unfortunately, it takes more than a swipe and a signed contract to make an EFT program successful. Declined cards are an inevitability that attribute to a loss of valuable money and time. Unfortunately, recent data breaches at major stores like Target and Home Depot have resulted in millions of reissued credit and debit cards, and many more declined credit cards in tanning businesses.

How your business handles a failed EFT transaction can make a big difference in the lifetime value and satisfaction of your customers – not to mention the difference it can make in how much money you’re actually able to recover. Try some of the tips below to maximize recovered declines while keeping your customers happy:

  1. Keep your emotions out of it. It’s easy to let your imagination run wild, fall victim to every sob story you hear, or resolve to send every client to collections if you’re not careful. The key is to be understanding without being a pushover, and firm without being impersonal. Professionalism and non-judgment is key to successfully achieving your goal of getting paid.
  2. Be proactive. Most membership contracts outline how much customers pay, when they pay, and how much, but not all include a proper explanation of the procedures that take place after a card is declined. Set the right expectations from the start so your clients don’t think that their obligation is tied strictly to their credit card. If there happens to be another major data breach at a retail store, get ahead of the situation by sending a reminder email after a couple of weeks to let your customers know they may need to update their payment information.
  3. One size does not fit all. When it comes to a declined credit card, there are many reasons for things to go wrong. In the case of a soft decline, a system error or shortage of funds may make it worth retrying the card; a hard decline is not temporary, so any additional attempts to run the card are far less likely to be fruitful.
  4. Consider additional precautions. You could institute a decline fee to cover the associated costs with a payment failure – this doesn’t need to be a large amount. Alternatively, you could try to get an alternative form of payment at signup instead of clamoring for one later.
  5. Make contact information collection a priority. When a client signs an EFT contract, have them include their phone number and email address, and encourage your employees to verify them as they are put into the system. It may sound like overkill, but if their card declines and their information is incorrect, all you can do is wait for them to come back into the store.
  6. Create a statute of limitations. If a member’s card declines and they don’t come back into the store, it’s not the wisest idea to continue charging their account. Although you are entitled to do so, the customer is far less likely to reactivate their membership if they owe you hundreds of dollars. Whether you cancel the account immediately or after two months is up to you.
  7. Don’t give up. You don’t want to harass your clients, but it’s also important to give them ongoing opportunities to come into the business. If it’s been six months or a year since the client’s card declined and they stopped coming in, try one last email or postcard saying that they are missed at the salon and offer a free tanning session. It may seem counterintuitive to offer a freebie to someone who owes you money, but it may be better to bring the client back into the business with a clean slate than to harbor sour grapes over $24 for a membership they never used that month.

Change your procedures and expectations for a high-performing EFT program that benefits everyone. Declined credit cards may be par for the course, but they don’t need to be the cause of disaster.