Question
What is the "Reserve Collected" that appears on our monthly Statement of Remittance? How is it calculated, and when will we receive the reserve?
Answer
When Dual Code acts as the Merchant of Record (MoR) for sales of your courses, we require a reserve to manage financial liability created from transaction disputes from your customers, including chargebacks (for credit card payments), insufficient funds (for payment by cheque), refunds and cancellations. The amount of the reserve depends on numerous factors.
Here are a few examples:
- An organization that only sells individual licenses with an enrolment duration of 30 days would see a smaller reserve because it's less likely that someone would dispute the transaction after the 30-day period (e.g. after the course is over).
- An organization that sells annual site licenses (e.g. unlimited usage for a period of 365 days) would see a larger reserve because if you removed the course from your course catalogue 120 days after a customer purchased it, that customer may be entitled to a refund for the remainder of their term (e.g. 245 days in this example).
- An organization that sells instructor-led courses would typically see a reserve until after the course is delivered because of the risk associated with synchronous training (e.g. the session needs to be postponed or cancelled).
In addition to the above, all credit card companies allow users to dispute a charge to their credit card within a reasonable amount of time (generally 30 to 90 days following the date of purchase). While a customer can ask for a credit card chargeback in Canada for pretty much anything, there are only a few instances where they’ll be successful. In the event that one of your customers requests a chargeback, Dual Code will work directly with the credit card company to provide evidence that the sale was legitimate. This may include:
- Providing evidence that the user authenticated in the system at the time of the transaction using a unique set of credentials
- Providing evidence that the user was active in the course (e.g. viewed the lessons, completed the quizzes, attended an instructor-led session)
- Providing evidence that the user completed the course (e.g. a learning record was issued, a certificate of completion was sent to them)
Should the credit card company accept to grant the customer a chargeback, Dual Code will be required to deduct the amount from the reserve as well as a chargeback fee charged by the credit card companies.