Understanding disputes, claims and chargebacks
Payment disputes can be a frustrating experience, especially if you haven’t encountered one before. This page will take you through what disputes and chargebacks are, why they happen, what you can do to prevent them, and how Ezidebit supports you in the event of a payment dispute from your customers.
What is a dispute?
A dispute happens when a card or account holder makes a request to reverse a payment that has been made to your business. Once their bank or financial institution receives this request, you will receive a notification from Ezidebit asking for more information.
If their bank determines there is not enough proof that the transaction was made legitimately — or the dispute reason is not adequately answered — a reversal occurs, meaning the money is credited to the card or account holder.
Why do disputes occur?
Under the Australian banking regulations and Credit Card Schemes, a customer may — for any reason — query a payment from their bank account or credit card. Payment disputes can happen for a number of reasons, ranging from fraud to misunderstandings over the payment arrangement between a business and its customers.
Some of the most common reasons a dispute occurs are:
Unauthorised use of a card or account
Cancellation of a recurring service
Incorrect amount processed
Customer is unhappy with the goods or services received
How Ezidebit supports you in the dispute process
Protecting our customers from the risk of losing funds due to disputes and fraud is very important to Ezidebit. We have a dedicated team of experts to advise and guide you through the process. We work hard as advocates of your business to manage any dispute requests you may receive. We may recommend alternative options based on our experience, collect the necessary evidence from you to prove the transaction was legitimate, and liaise with the banks on your behalf as an advocate for your business and position.
If you’ve received an email notification from Ezidebit about a payment dispute you can get in contact with our dispute team here.
As a business, by taking payments from your customers, it’s important to have a clear payment dispute prevention strategy in place. This should cover tactics to minimise the risk of disputes in the first place, how to encourage open communication with your customers so they come to you when they have an issue rather than disputing it with their bank, and finally what evidence needs to be provided should a formal payment dispute occur.
The following information will help you navigate the dispute process.
Requests For Information
Payment Charged Back
What is a Dispute? What is a Chargeback?
A dispute (or claim) is made by your customer (a payer). A request for information is sent to your business and must be responded to within a strict timeframe, which will be noted at the top of the email notification. The outcome may be a chargeback.
A chargeback is a reversal of a transaction and usually occurs when an account or cardholder raises a dispute or claim with their financial institution or Issuer. Under the Australian banking regulations and Credit Card Schemes, a payer may for any reason query a payment from their bank account or credit card.
A chargeback does not mean your business is automatically entitled to the payments for the goods or services you have supplied; it also doesn’t cancel or change the agreement you have with them. It means the payment has failed and a new arrangement will need to be made with your customer (the payer) to recover the funds.
How does the process work?
1. The account or cardholder queries a payment with their financial institution (also known as the Card Issuer), or the Issuer has reason to think the payment might be unauthorised
2. The bank or Issuer raises a claim, or a chargeback via the scheme rules
3. Ezidebit’s sponsor bank is notified and requests documentation from Ezidebit (the merchant) to verify the transaction. There is a set timeframe to respond to these requests (see below)
4. Ezidebit notifies your business of the request via email
5. Your business either accepts the chargeback or alternatively, documentation is provided that verifies and supports the payment, which is forwarded to our sponsor bank
6. An arbitration case is opened and the dispute is either resolved and decided in your favour, or the Issuer will determine that final liability for the payment rests with the merchant and receiving business
7. If the outcome is a chargeback, the payment is reversed to the account or cardholder and a chargeback fee may be payable by the business to Ezidebit.
How do I prevent disputes and chargebacks?
Disputes are a known risk when accepting payments, however you can take steps to reduce or prevent them. They are not always the result of something your business did or didn't do; errors can be made by all parties involved in the processing of a payment.
Following these guidelines will lessen the risk and help to protect your business:
Ensure credit card payers know the description that will appear on their statement;
Only take payments for goods and/or services your business is providing, if payments are passed to a third party you are responsible for them if charged back;
Refund only to the account or card the payment was made from;
Respond to all dispute notifications within the timeframe required;
Be wary of anyone who offers numerous card numbers, asks you to transfer funds to another bank account, or provides elaborate reasons for why you can’t talk to them. Take additional steps to check that the payer is the cardholder;
Do not accept ‘authorisation’ for a payment from a person claiming to be the wife, husband, partner, friend, etc., of the cardholder. Only the actual cardholder can authorise a payment; and Remind payers of an upcoming recurring or auto renewal payment.
Further fraud prevention information can be found in the Credit Card Fraud Protection Guide.
Requests for Information:_
I’ve received a request for information, what do I do now?
Understanding the information that’s been sent to you:
Unique identification number for the dispute, to be included if you’re not responding directly to our email.
This date is specified by the banks and card issuers, slightly longer for credit card disputes and typically between 3-7 days. We can request an extension but it must be requested before the timeframe expires and can be declined.
Account holder / Cardholder name
Ezidebit receive the account holders name for a bank claim and will include this information, if it’s different to the payer name this might be the reason for the dispute. Check for errors, was the correct account number given to you and entered correctly? Only an authorised signatory on a bank account can authorise a payment.
The cardholder name is not currently provided by the card issuer, we’ll include what was entered when the payment was created.
The customer name that is receiving the goods or services from your business, entered when the payment was created.
Group ID / Ezidebit reference
Unique payment or payer identifiers in Ezidebit’s system.
May have been entered at the time of payment creation or generated by software.
Transaction date and amount
Given to Ezidebit by the payer’s bank or card issuer and verified.
Often generic advising that documentation is requested to show how the payment was authorised, and support that goods or services were provided. If additional information is known, we will include it and a direct response is expected.
Check the payment is correct
If an error was made, a duplicate payment processed, or incorrect for any other reason - let us know you accept the claim or chargeback. We’ll arrange with the banks for the payment to be returned.
Contact the payer
Resolve any issue, this might be recognizing the payment, cancellation requests, confusion over the payment, etc.
Ask the payer to contact their bank or card Issuer to cancel the dispute and confirm they have given authority for the payment, they should request any temporary credit they have received is returned but their Issuer may not do this.
Request the payer provide you with an update, if they have received a temporary credit that will not be reversed, or had their card cancelled, the bank may cancel the dispute but continue to pursue a chargeback to recover the funds and a fee of $44.00 per payment is charged.
Respond to the email from Ezidebit
If no response is received, a chargeback will likely occur. It’s important you send a response or the bank and Card Issuers may think you are accepting the chargeback.
Provide supporting documentation if you wish to defend the payment (see below). • Alternatively, advise Ezidebit to return the payment if you believe it will be charged back and wish to manage recovery of the funds (and any fees incurred) directly with the payer.
Credit card payments are processed in a card not present environment, the Credit Card Scheme regulations allow for the Issuer to charged back because the nature of the transaction does not require the card to be present for the payment to be made.
Can I refund the payment to the payer?
We don’t recommend it after a request for information has been received, but if you do please follow these guidelines:
Only refund to the bank account or credit card the payment was made from. If you refund through any other method the disputing bank or card Issuer will not be able to verify the refund was made and may chargeback the payment
Respond to Ezidebit’s email within the timeframe and provide proof of refund, this can be a receipt or screenshot of the transaction.
Don’t refund a payment if the timeframe has expired, the bank may charge back the payment and it will then be returned to the payer twice.
I need time to resolve this with my payer, how do I get an extension?
We can request an extension on your behalf but it must be requested before the due date on our original email notification to you. If given it will usually be for anywhere between 2-5 days only. If this will not be sufficient time, respond to Ezidebit’s email accepting the chargebacks, we’ll arrange with the bank for the payment to be returned. This will close the dispute and you will then have the time and space to resolve any issue directly with the payer and organise a new payment.
What documents can I provide to show a payment is correct and authorised?
Defending the payment (refusing the chargeback) requires documentation. Evidence can be submitted once, please include all applicable documents in your response.
Payment authority - obtaining a debit authority, with Ezidebit’s service agreement terms and conditions and the payers bank account BSB, number, and name, is the most successful way to defend a disputed payment. A signed or electronic form shows the payers details and account, and records who has authorised the payment.
While not guaranteed to stop a chargeback - it might not be the authorised signatory on the account, or they payer may be claiming debits should have been cancelled - it should be the minimum provided for any dispute request.
Other documents will be needed if they support your defence and directly address the dispute reason, e.g. cancellation clause, tenancy or membership agreements, emails, etc.
Payment authority - obtaining a debit authority, with Ezidebit’s service agreement terms and conditions, is the most successful way to defend a disputed payment. A signed or electronic form shows the payers details and masked card number, and records who has authorised the payment.
A debit authority is not guaranteed to stop a chargeback because it is a Card Not Present or MOTO (mail order/telephone order) transaction. If the payment continues to be disputed by the card issuer or cardholder it can be charged back.
Check out our Credit Card Fraud Protection guide on our website for more details about this transaction type and how you can lessen the risk:
Ezidebit understands that a debit authority may not be possible due to the nature of your business, the software you’re using to integrate with Ezidebit, or the goods or services you’re providing. But you may have other documents that build a compelling case for the transaction being correct and authorised.
Receipts - should contain a clear description of the goods/services provided, transaction amount and date, your trading name and location.
Proof of delivery - should contain delivery address and date, and signature of the recipient if available.
For a recurring transaction - evidence of a contract or agreement, proof that the cardholder is using the goods or services, evidence of a previous transaction that was not disputed. Evidence, such as photographs, identification, or emails to provide a link between the person receiving the goods or services and the cardholder. Evidence that the transaction was completed by an authorised member of the cardholders household or family.
For an eCommerce transaction where the goods or services are digital, a description of the purchase and the date and time, plus any of the following that are applicable
payers IP address and device location
device number and name
payers name and email address linked to the profile held by your business
evidence that the profile set up by the purchase was accessed and verified
proof that the website of application was accessed for the services purchased
evidence that the same device and card were used in a previous transaction that was not disputed.
Send everything! We’re not asked a second time, anything you have that shows the payment was authorised by the account or card holder and goods or services were provided. The good news is the banks and card issuers don’t want a long written explanation from you, they want to see supporting documents and a brief description of the compelling evidence if required.
If you’re sending a big contract or agreement, we appreciate if you only send the relevant pages or sections. All documents are sent unedited to the bank but this will assist everyone. A scan of a document is always preferred over a photo as the resolution and size makes it easier to send and receive.
Please don’t send audio or video files, the banks won’t accept these formats. They will accept a transcript of an audio file.
I’ve provided documents defending the payment, does this mean it won’t be charged back?
Not necessarily, all information and documents are subject to the cardholders and the bank or card Issuers acceptance. This may mean the result is a chargeback even though all evidence is returned to the bank.
When the claim is for a bank account direct debit, providing a payment authority that includes bank account details, and responding to the reason for the dispute, is usually enough to stop a chargeback except on rare occasions where the payment is determined to be fraudulent and the authorised signatories on the bank account did not give approval.
The cardholder is not a customer of the business, how do I find the payment?
Ezidebit receive the card details, date, and amount, of the disputed transaction. We don’t receive the cardholder name. The names provided on the email were entered by the payer or your business at the time of the transaction.
Please consider that the cardholder may have made a purchase for another person, either as a gift or for a family member.
If you need assistance finding a payment please contact our Support team, you can also find the information reported to you when it was paid to your account on your settlement report.
The payer said they have received the payment back, why did they get a refund when I’ve just received the dispute?
When a credit card payment is disputed, the Issuer may provide the payer with a temporary credit. This does not mean a chargeback has occurred but does make it more likely. It does make it harder for the payer to cancel the dispute with their bank if the issue is resolved. To ensure that a fee is not incurred if the Issuer decides to chargeback the payment, please reply to our email advising you approve a refund. If the timeframe has not expired Ezidebit will return the payment to the bank on your behalf, the dispute or claim will be closed, and the fee avoided.
The payer has been told by their bank to make the payment again when they tried to cancel the dispute, what does this mean?
The Issuer may be reluctant to reverse the temporary credit they gave the cardholder because the payment authorisation was questioned. A new payment arrangement can be made with the payer, to avoid the fee, please reply to our email advising you approve a refund. If the timeframe has not expired Ezidebit will return the payment to the bank on your behalf, the dispute or claim will be closed, and the fee avoided.
The payer’s credit card has been cancelled or they have a new card number, will this affect the outcome?
Yes, this usually means fraudulent activity is suspected and the Issuer will typically make a decision to chargeback the disputed payment even though the payer may have advised their bank that it is approved. A new payment arrangement can be made with the payer, to avoid the fee please reply to our email advising you approve a refund. If the timeframe has not expired Ezidebit will return the payment to the bank on your behalf, the dispute or claim will be closed, and the fee avoided.
The payer said they did not raise the dispute, what does that mean?
Either they are not the account or card holder and the correct holder has raised a dispute. Or the payer has queried the payment with the card issuer not realising it would result in a dispute being sent. You can check with them that they gave correct bank or card details and can see the payment to your business on their statement. Hopefully this is an error when the card number was input and not the alternative which is someone else’s card was used knowingly.
Payment Charged Back
Can I dispute the chargeback decision?
No, in most cases the Issuer’s decision is final and must be accepted by Ezidebit and the business that received the payment. If there is reason to believe an error has been made, Ezidebit will advocate on behalf of your business.
The arbitration will not be reopened simply because you disagree with the outcome, or have new documentation to provide. It is important to therefore provide all supporting documentation and information when it is requested, as we have one chance to provide an adequate response.
Did Ezidebit refund the payment?
No, we will never do this without your approval. The payment has been charged back by the account holders bank or the Card Issuer. They are allowed to return the payment in this way; the chargeback is the notification to your business that the payment has been reversed from your Ezidebit payment facility.
The payer cancelled the dispute with their bank. Why did I get a chargeback?
Due to privacy restrictions, Ezidebit is not told if the payer has cancelled the dispute, so we are unable to confirm this.
The Issuer may be reluctant to reverse a temporary credit because the payment authority was questioned and will advise the payer to arrange a new transaction. They will recover the credit by charging back the payment. We recommend any fee incurred due to this action is included in the outstanding amount owed by the payer.
The disputed payment was charged back. How do I recover the funds?
The payment can be arranged with the payer to be processed again. However please note that if it is not approved the payment is likely to be unsuccessful or charged back again.
If an agreement cannot be made, you may consider debt recovery and legal actions that can be taken. The outstanding amount may include any fees incurred due to the actions of the payer.
I provided documentation within the timeframe. Why did I incur a chargeback fee?
A $44 fee is applied to every payment that is charged back; this is a banking system handling fee and not a fee Ezidebit has the ability to waive. The decision to chargeback a payment is made by the payer’s bank or Card Issuer.
The chargeback reason is ‘cancelled recurring ’, but the payer didn’t cancel their payments with our business?
This reason can mean the payer has told their bank they cancelled the transaction before it was made; a block may have been placed on the account or card at the same time to stop any future payment attempts.
If I get the payer to reverse the chargeback through their bank, will I get the money and the fee back?
If a chargeback is reversed by the payer’s bank or Card Issuer, we will be notified, credit the payment to you, and notify you via email. Unless the bank has made an error, they will not reverse the fee as it’s incurred for handling the chargeback. The fee is payable by the payer to your business as it has only been added due to their actions. Please keep in mind that a chargeback reversal may take months to be received. It is usually faster and simpler for the payer to arrange to make the payment again.
The credit card payment was successful. How can it be charged back?
A successful payment simply means there were available funds and the card was not cancelled. Authorisation and credit of funds to your business do not guarantee that the transaction is genuine.
Can my business or Ezidebit refuse to let the payment be charged back?
In short, no. All businesses using a merchant facility must agree to comply with the Australian Payments Network BECS scheme and Credit Card Scheme chargeback rules and regulations, and the policies of their Sponsor bank.
Ezidebit does not determine the rules and regulations regarding chargebacks. All banks and financial institutions are governed by schemes determined by the Australian Payments Networks and card issuers, e.g. Visa, Mastercard, Amex, Diners, etc.
When the claim is for a bank account direct debited payment, the banks have an agreement that if there is a physically signed authority from the account holder, and the dispute reason is responded to, a payment is shown to be approved.
A payment was charged back but I didn’t receive a request for information. How did this happen?
In rare cases, the chargeback will occur without an opportunity to provide a response and refute the claim. The chargeback reason is more likely to be ‘cancelled recurring transaction’, but it can also happen if the bank has reason to believe the payment is fraudulent.
The payment has now failed the same as when a payment is unsuccessful at the time of the transaction.