Understanding disputes, claims and chargebacks
Understanding disputes and chargebacks
Here you will find information about disputes and chargebacks, how the process works, and how you can manage them to achieve the best result for your business.
Ezidebit adds value to your payment processing by reducing the impact of chargebacks to your business. Our dedicated team liaises with the banks to manage any requests you receive.
It’s important to have an action plan in place before you receive any potential claims. The following information will help you navigate the 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.
Understanding the information that’s been sent to you:
- Claim ref
Unique identification number for the dispute, to be included if you’re not responding directly to our email.
- Due date
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.
- Payer name
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.
- Your reference
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.
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 sent to the bank.
It is usually enough to stop a chargeback for a claim for a bank account direct debit transaction by providing a payment authority that includes bank account details and a response to the dispute. However, there are rare instances 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 receives 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 on 1300 763 256, 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, so 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 a fee is not incurred if the Issuer decides to chargeback the payment, please reply to our email advising you approve a refund. If it within the timeframe indicated, 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 that you approve a refund. If it is within the timeframe indicated, 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 and/or they have a new card number. Will this affect the outcome?
In short, yes. This usually indicates 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 it is approved.
A new payment arrangement can be made with the payer.o avoid the fee, please reply to our email advising that you approve a refund. If it is within the timeframe indicated, 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?
If this is the case, it is likely that they are not the account or cardholder and the correct holder has raised a dispute. Alternatively, the payer may have 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.