Can I charge a card on file without customer's approval?

Discuss payment options with customers first in order to avoid chargebacks, negative online reviews

Your Business Credit with Elaine Pofeldt

Elaine Pofeldt is a journalist whose articles on entrepreneurship and careers have appeared in Fortune, Working Mother, Money and many other publications. She is a former senior editor at Fortune Small Business magazine and an entrepreneur herself, as co-founder of 200kfreelancer.com. Her book, “The Million-Dollar, One-Person Business,” was released in 2018. She writes "Your Business Credit," a weekly column about small business and credit, for CreditCards.com.

Ask Elaine a question, or see if your question has already been answered in the Your Business Credit answer archive.

Can I charge the remaining balance on a finished job on the customer's card on file without their approval?

If you signed a contract with the customer, you might want to run it past an attorney who knows the laws of your state first. However, it is always best to discuss payment options with the customer before charging their card on file. That way you make sure to avoid a potential chargeback or even a negative online review, which could hurt your business.

Expert Q&A

Check out all the answers from our credit card experts.

Dear Your Business Credit,

I recently entered into a written contract to paint someone's house. They paid me half at the start of the job with a credit card, which is on file with Square (my processor), and agreed in writing to pay the balance immediately upon my finishing the job.

I finished a day ago and they decided to go on vacation and stopped answering my texts. Can I charge the balance due on that card on file? Thanks for your website. – Brad 

Dear Brad, 

It’s funny how summer can turn stressful when you’re running a small business and trying to get paid. Customers’ vacations can wreak havoc on your cash flow.

Without knowing what your contract with the customer says and running it past an attorney who knows the laws of your state, it’s hard to determine if you can simply run the card on file.

If the charge is for a large sum and you don’t hear back from the clients for a significant time period, you may want to ask an attorney for advice.

However, I’d give the customers at least a couple of weeks to get back to you. They could be camping in the woods somewhere with limited Wi-Fi access.

See related: When is a charge on a credit card unauthorized?

Charging a customer’s card: Ask them first

Beyond that, I don’t recommend running a charge on customers’ cards without having a conversation to ascertain whether they agree the job is done – even if they’ve blown off paying you for the moment in favor of going on vacation.

It may seem unfair, but if they think there is still more to do, they might call the credit card company to challenge the charge, resulting in a chargeback for you.

You’ll then have to fight the chargeback, which will take time away from your business.

Plus, there may be some reason they want to pay you on a different card for the balance. Maybe the current one is close to the credit limit.

Divide final payments wisely

So, how do you avoid a similar problem happening again in the future?

  • You’ve wisely opted to ask for a substantial deposit up front, which gives you some protection.
  • Instead of asking for the second half of your payments on the back end going forward, consider dividing the final progress payment into two payments – one when you hit a key milestone and the last when you finish the whole job. The less money you have to collect after the work is done, the better.
  • Building one more point of contact into your collections may be helpful for cash flow, too.

Upon completing a substantial-sized project at someone’s home, you might call to say, “We’re getting ready to invoice but, of course, we wanted to make sure you’re happy. Could I stop by this morning to give you a quick run-through of what we did?”

Assuming you did the job well and they have signed off, you could, at that point, say, “Would you prefer to pay by check or credit card?”

If they have any quibbles with the job – and some customers will – you will then have an opportunity to decide how to address them.

That may help you prevent someone from venting online in a review that hurts your business.

Tip

Tip: Chargebacks are costly and can hurt your business, but there are steps you can take to minimize the chance to get hit with a chargeback. Following processor protocol and learning to spot warning signs of fraud are just two tips for merchants to avoid credit card chargebacks.

Fold customers’ summer vacations into work schedule

One last thought: When you are scheduling projects during the summer months, you might inquire if clients are planning any upcoming travel that you need to plan around.

  • If you find out a client is going to be away for the month of August – and that is going to leave you in a cash crunch – you could schedule their job for September instead, and work on the home of someone who will be in town.
  • They don’t need to know the reason you can’t get to it until September. Most of us assume good contractors are busy during the warmer months.

Practices like these won’t insulate you entirely from slow payers or nitpickers who try to find ways not to pay you, but they may help you in cases where customers’ busy lives are hurting your cash flow.

Good luck!


Join the discussion
We encourage an active and insightful conversation among our users. Please help us keep our community civil and respectful. For your safety, do not disclose confidential or personal information such as bank account numbers or social security numbers. Anything you post may be disclosed, published, transmitted or reused.

If you are commenting using a Facebook account, your profile information may be displayed with your comment depending on your privacy settings. By leaving the 'Post to Facebook' box selected, your comment will be published to your Facebook profile in addition to the space below.

The editorial content on CreditCards.com is not sponsored by any bank or credit card issuer. The journalists in the editorial department are separate from the company's business operations. The comments posted below are not provided, reviewed or approved by any company mentioned in our editorial content. Additionally, any companies mentioned in the content do not assume responsibility to ensure that all posts and/or questions are answered.




Weekly newsletter
Get the latest news, advice, articles and tips delivered to your inbox. It's FREE.


Updated: 09-18-2018