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Guide to chargebacks

What is a chargeback?

A chargeback is a reversal of a credit card transaction and usually occurs when a cardholder raises a dispute with their financial institution (also known as the Issuer) in relation to a purchase made with their credit card.

A chargeback may result in the amount of the original sale and a chargeback fee to be deducted from the merchant’s account. The reasons why chargebacks occur may vary however, chargebacks are generally the result of a customer being dissatisfied with their purchase or due to unauthorised or fraudulent activity/use of their card. Any transactions, processed without a proper authorization from the issuer, can also be returned as chargebacks.

Under Condition 7.0 of the Merchant Terms & Conditions, we may process a chargeback on your account if certain conditions are met.

Ways to reduce chargebacks

  • Process refunds back to the credit card the original purchase was made from. Avoid making refunds by cash or cheque for purchases made on credit/debit cards
  • Always deliver goods or services as advertised or promised and obtain and store signed delivery confirmation that goods were collected or received by the actual cardholder
  • Be wary of unusual or large purchase requests
  • Use the business or company name most recognised by your customers on your transaction receipts. This should be the trading name you have provided for your merchant facility
  • Terms and Conditions have to be disclosed to the cardholder at the time of purchase. These should be clear and concise and should be acknowledged by the customer by signature or initials if the customer is present or available during the order process and for online orders, if they require a “Click to Accept”
  • Your customer should always be made aware of a cancellation or refund policy in writing including if you do not offer refunds or only offer store credit. This should be clearly stated on your website and in store
  • Promptly resolve customer disputes and refunds. Communicate with customers to try to establish mutually satisfactory solutions to issues relating to the quality of goods or services provided
  • Provide transaction receipts when requested, without delay
  • When the card is present do not manually enter the card number, tap or insert the card and have the cardholder enter their PIN or provide their signature. Always obtain authorisations and ensure the authorisation is for the full amount of the sale
  • When the card is not present (MOTO) obtain as much information about the cardholder as possible. This can include full name, address, phone numbers, email address, credit card number, name of bank, expiry date, CCV, etc. It is advised to obtain the cardholder’s signature on some correspondence (for example a scanned order confirmation).
  • Use 3D Secure programs such as Verified by Visa, Mastercard® SecureCode™ and American Express SafeKey® to provide you with enhanced online security.

What is the process for a chargeback?

  1. Cardholder raises problem with their financial institution (known as the Issuer) or the Issuer discovers a breach of the card scheme rules
  2. Issuer raises a Chargeback via scheme
  3. BankSA Chargeback team receives the Chargeback and may request documentation from the merchant to verify the transaction. The merchant is required to respond to these requests, by the timeframe specified in the Chargeback letter
  4. If the chargeback is determined to be invalid, BankSA Chargeback team will decline the chargeback and return it to the Issuer
  5. If the chargeback is determined to be valid, the chargeback amount is debited from the merchant’s account and notification is provided to the merchant. A chargeback fee may also be charged to the merchant’s account.

Most common reasons for chargebacks

 

Chargeback reason Why this has happened
Unauthorised/fraudulent transaction Cardholder did not authorise the transaction/s, transaction is fraudulent.
Cardholder does not recognise transaction This can occur when a cardholder does not recognise your trading name on your credit card statement.

Tip: You should always trade under the same name you have provided for your merchant facility and ensure it appears on your transaction receipts.

Authorisation for Transactions Appropriate authorisation was not obtained. This can occur when a transaction has been processed above the floor limit and authorisation was not obtained.

The chargeback may be raised under theses following conditions:

  • Account number not on file
  • Declined authorisation
  • Expired card

No authorisation.

Processing Error Cardholder/ Issuer believe transaction has been processed incorrectly.

Common scenarios under this chargeback reason:

  • Incorrect transaction amount/card number
  • Late presentment of the transaction

Transaction paid by other means. (i.e. cash or a different card)

Duplicate/Multiple processing Cardholder claims transaction for same goods/services was processed more than once.
Non receipt of goods/services   Cardholder claims goods/services for the transaction has not been received/rendered to the agreed-upon location or by the expected delivery date.

 

For more information on Chargebacks, please contact the BankSA Merchant Helpdesk on 1300 650 977, option 1 then option 3.

 

 

Help us help you

 

Evidence required to refute the chargeback You may be liable for chargebacks if:
Signed imprinted/PIN voucher for all card present transactions by the required timeframes and all surrounding information including one or more of the following:
  • A clear description of the purchased goods or services
  • Transaction amount
  • Transaction date
  • Your merchant trading name
  • Your merchant location.
  • The transaction processed was manual/card not present
  • If your response is not received by the required timeframe.
Supporting documentation to prove that appropriate authorisation was obtained.
  • You did not obtain the appropriate authorisation within timeframe for the transaction in dispute
  • Transaction processed over your floor limit
  • Card was expired prior to transaction date
  • Transaction was processed to a card that does not match a valid card number on file for the Issuing bank.
Signed transaction receipt and all other related signed documentation to prove the transaction was processed:
  • With a payment by other means
  • Within the mandatory time limit
  • With correct transaction amount/card number.
No legible transaction receipt and documentation is provided to prove the transactions were processed accurately.
  • Two separate signed or imprinted transaction receipts or other records to validate separate transactions
  • Documentation to show that a refund was processed to offset the disputed transaction through the same payment channel the cardholder used to make the original payment.
  • You are unable to provide evidence to support separate transactions
  • You accidently processed the same transaction twice or more for the same purchased goods and/or servi
  • You did not process a refund via the same payment channel as the disputed transaction.
Signed documentation to prove that the cardholder or cardholder authorised recipient received the merchandise/service by the expected delivery date and at the agreed location.
  • Goods and/or services were not received by the appropriate recipient at the agreed location by the expected delivery date
  • You are unwilling or unable to provide the goods and/or services and have not refunded the cardholder via the same payment channel as the disputed transaction.

 

 

Important information

BankSA does not determine the scheme rules and regulations regarding Visa, Mastercard, eftpos or China UnionPay purchases. All banks/ financial institutions are governed by scheme rules and regulations.

The nature of the dispute and the type of chargeback will greatly influence what can be done about defending chargebacks. Please also note that any supporting documentation must be provided in a timely manner and if we determine that the evidence provided is insufficient, it may result in a chargeback.

Merchants can also contact their customer to resolve the dispute.