Trades and Contractors: Deposits, Balances and Cancellations

Deposits and progress payments under Visa rules

Visa defines an advance payment as a transaction for part or all of the cost of goods or services provided later. Before completing one, the merchant must get the cardholder's express informed consent to an agreement that includes a description of the work, the total purchase price, and the cancellation and refund policies, including the date any cancellation rights expire without losing the advance payment. Only certain merchant categories may take the entire purchase amount upfront; custom goods or services is one of them, and the terms must give the delivery date. The receipt must show the amount and the word Advance Payment, Deposit or Partial Payment if a balance is outstanding, and Balance on the final payment. If the merchant does not follow the terms of the sale, Visa requires a full refund of the amount paid.

Do not split one charge to fit a limit

Visa prohibits splitting a transaction across two or more receipts, with exceptions that include advance payments and paying part on one card and part with another card or payment method. A deposit and a later balance under a written agreement are a different thing from breaking one invoice into several charges to get under a card or account limit. If a job is larger than your approved ticket size, ask your provider to review the limit, as our velocity limits guide explains.

The 3-day cancellation right on home sales

The FTC's Cooling-Off Rule, 16 CFR Part 429, covers door-to-door sales of consumer goods or services where the buyer agrees to buy somewhere other than the seller's place of business, including the buyer's home, with a purchase price of $25 or more at the home or $130 or more elsewhere. The seller must give a written cancellation notice, and the buyer can cancel until midnight of the third business day after the sale. Within 10 business days of receiving a valid cancellation, the seller must refund all payments. The FTC's consumer guide says the rule does not cover, among other things, sales for goods or services not mainly for personal, family or household use, sales needed to meet an emergency, or repairs and maintenance the buyer asked the seller to visit their home to do (though extra items bought beyond that request are covered). Plan your deposit timing and refund process around this.

What customers are told to expect

The FTC's home improvement guidance tells homeowners that scammers ask to be paid for everything upfront or only accept cash. It tells them not to pay the full amount upfront, notes that some states limit how much a contractor can ask as a down payment, and says never to make the final payment until the work is done and they are satisfied. It also tells them to ask for a written contract with the contractor's name, address, phone and license number and, for contracts signed at home, a written statement of the 3-day right to cancel. A quote that already includes a card option for a deposit, clear milestones and a written cancellation notice answers those questions. Check your state's contractor and deposit rules.

Collecting in the field

For deposits and final balances on site, tap to pay on a phone or a wireless terminal lets the customer pay while you are there. For balances approved later, a payment link sent with the invoice works. Illustrative example only, with made-up round numbers: a $6,000 bathroom job signed at the customer's home with a $1,500 deposit, a $2,500 progress payment when tiling is complete, and a $2,000 balance on sign-off, each with its own receipt labelled Deposit, Partial Payment or Balance. Business customers can often pay larger invoices by ACH; our same-day ACH and Level II and III data guides cover those routes.

Disputes on long jobs

If work is not delivered, a cardholder can dispute under Visa's Merchandise/Services Not Received condition. Visa's time limit runs up to 120 days from the processing date or from the last date the cardholder expected the services, capped at 540 days from processing. Written start and completion dates, milestone sign-offs and photos are your response evidence.