Elective may adjust your payouts in the cases of cancellations, reversals, or chargebacks. These cases are outlined in your merchant agreement which can be found under Settings in your Elective portal but we have also created this article to outline all of the cases where adjustments may occur and how they are calculated and handled.
Payout Adjustments
A cancellation is when Elective ends a customer's payment plan prematurely and stops collecting on all future payments.
Cancellations are fully controlled by you, the merchant. You may approve a cancellation if you wish to allow a student to back out of a program without refunding them. This is another tool for you to use as an alternative to issuing a refund.
If a student reaches out to Elective directly to request a cancellation, we will always ask you for approval before initiating the cancellation. This is completely within your control.
Once approved, we will initiate the cancellation. The adjustment amount will be taken out of your next payout.
Adjustment Calculation
The adjustment for a cancellation is calculated as follows:
Adjustment = -[Original Payout Amount – (Collected Amount – Elective Fee on Collected Amount)]
This adjusts back the uncollected portion of your initial payout.
Example
A customer emails you informing that they had a medical emergency and can no longer participate in your program. They want to be removed from the program and stop making payments.
Payment Plan Details:
- Original Order Total: $1,000
- Original Payout: $880
- Collected Amount: $500 (50% of the original order total - simplified for the example)
- Elective Fee: 12%
- Elective Fee on Collected Amount: $60
The adjustment for this calculation is:
-$440 = -[$880 - ($500 - $60)]
This means that your next payout will be adjusted by -$440 to reflect this cancellation.
A reversal occurs when a customer fails to successfully pay the first payment (down payment) and/or second payment (first monthly payment) of their payment plan.
The majority of Elective partners are eligible to have this provision removed within 3 months depending on the payment performance of their customers within this period.
If the customer fails to pay either of these payments despite extensive attempts from Elective to work with the customer to recover the payment plan - including multiple emails, text messages, and phone calls - then Elective will initiate a reversal.
A reversal will only ever occur for the first or second payment of a payment plan. Once the second payment has been paid, Elective assumes all payment and collections risks.
Notifications
Elective will notify your team using the email we have on file for your account ~15 days before a reversal occurs. At this time, we will still be making efforts to collect from the customer, but this is to give you prior notice before the payout adjustment occurs.
We will send you an additional notification once the reversal is finalized.
You can also find out which orders are reversal candidates directly in your 'Orders' dashboard. An order that is a potential reversal candidate will have the 'Reverse Candidate' tag added next to its status.
Additionally, once a reversal is completed, the order status will be changed to 'Reversed'.
Adjustment Calculation
The adjustment for a reversal is calculated as:
Adjustment = -[Original Payout Amount – Collected Amount + Payment Processing Fees]
Where payment processing fees are calculated as 2.9% + $0.3 on each installment payment.
Example
A customer fails to make the second payment of their payment plan 30 days from their effective purchase date. Elective will immediately notify you that this student is a reversal candidate. 15 days later, after having attempted to contact them through every communication channel across a span of two weeks their order will be reversed.
Payment Plan Details:
- Original Order Total: $1,000
- Original Payout: $880
- Collected Amount: $100 (10% of the original order total - simplified for the example)
- Elective Fee: 12%
- Payment Processing Fees: $3.2 = ($100 x 0.029) + $0.3
The adjustment for this calculation is:
-$783.2 = -[$880 - $100 + $3.2]
This means that your next payout will be adjusted by -$783.2 to reflect this reversal. The status of the order in your 'Orders' dashboard will be adjusted to 'Reversed' to represent the reversal as well.
Chargeback Reversals
Chargeback reversals occur when a customer initiates a chargeback within 45 days of the effective purchase date.
In these cases, Elective will make the same adjustment as above to your next payout, but will also need to adjust an additional $15 to cover the chargeback fees levied against our payment processor.
Elective assumes all risk related to chargebacks once a payment plan passes 45 days of good standing from the effective purchase date.
The status of the order in your 'Orders' dashboard will be adjusted to 'Chargeback' to represent the reversal as well.
Please check the 'Chargebacks' section for an example of a chargeback reversal.
If a customer issues a chargeback after 45 days of the effective purchase date, Elective will reach out to your team using the email we have on file requesting relevant evidence so that we can file a chargeback dispute.
Your team will have five business days to respond to this request with evidence.
Failure to respond will prevent us from filing a dispute. In the case of a failure to respond, we will initiate a chargeback reversal.
Adjustment Calculation
The adjustment for a chargeback reversal is calculated as:
Adjustment = -[Original Payout Amount – Collected Amount + Payment Processing Fees + $15 Chargeback Fee]
Where payment processing fees are calculated as 2.9% + $0.3 on each installment payment associated with a chargeback.
Example
In the case of a chargeback, because a customer will typically chargeback all payments, the collected amount is $0.
Payment Plan Details:
- Original Order Total: $1,000
- Original Payout: $880
- Collected Amount: $0
- Chargeback Amount: $100
- Elective Fee: 12%
- Payment Processing Fees: $3.2 = ($100 x 0.029) + $0.3
- Chargeback Fee: $15
The adjustment for this calculation is:
-$898.20 = -[$880 - $0 + $3.2 + $15]
This means that your next payout will be adjusted by -$898.20 to reflect this chargeback reversal. The status of the order in your 'Orders' dashboard will be adjusted to 'Chargeback' to represent the chargeback reversal as well.
Need More Help?
We're happy to answer any questions you might have. Reach out to us at help@elective.com and we'll help you get up and running in no time!
