Preventing and handling chargebacks

Cardholder dispute initiation: Cardholders have up to 210 days from the transaction date to raise a dispute with their bank. Anything older than 210 days cannot be disputed as per eftpos Scheme Rules.

The Cardholder must then provide sufficient evidence to support their claim before a chargeback is made against you.

Merchant response: Once a chargeback is notified to the Merchant’s bank, you have up to 30 days to submit a response to NAB which will then be communicated to the Cardholder’s bank.

If you do not provide a response within the set time frame, the case will be resolved in favour of the Cardholder and the transaction will be charged back from your settlement account.

Pre-arbitration/arbitration: eftpos disputes will typically be resolved prior to arbitration.  However, pre-arbitration is an option when we cannot resolve the chargeback between the two banks.

These timelines ensure a structured approach to resolving chargebacks while providing Merchants (you) and the Cardholders bank with specific windows in which to respond at each stage.

Cardholder dispute initiation: Cardholders have up to 120 days from the transaction date to raise a dispute with their bank (timeframes may vary depending on the dispute reason code).

Merchant response: Once a chargeback is notified to the Merchant’s bank, you then have up to 45 days to submit a response to NAB which will be communicated to the Cardholder’s bank.

If you do not provide a response within the set time frame, the case will be resolved in favour of the Cardholder and the transaction will be charged back from your settlement account.

Pre-arbitration: If the Cardholder’s bank challenges your response with supporting evidence, the pre-arbitration stage begins, allowing the Cardholder’s bank an additional 45 days to review and respond.

Arbitration: If the Cardholder’s bank rejects your response, NAB has 30 days to initiate arbitration.

Cardholder dispute initiation: Cardholders have up to 120 days from the transaction date to raise a dispute with their bank (Timeframes may vary depending on dispute reason code).

Merchant Response: Once a dispute is notified to the Merchants bank, the Merchant has up to 30 days to submit a response to NAB, which will be communicated to the Cardholder’s bank.

If you do not provide a response within the set time frame, the case will be resolved in favour of the Cardholder and the transaction will be charged back from your settlement account.

Pre-Arbitration: If the Cardholder’s bank challenges the dispute further with supporting evidence, a pre-arbitration stage begins. The Cardholder’s bank then has an additional 30 days to review and respond. Note that in the case of a Fraud dispute, NAB will initiate the pre-arbitration as a response to the cardholder’s bank.

Arbitration: If the Cardholder’s bank rejects the Merchant’s response, the Merchant’s bank has 10 days to escalate the case to arbitration.

If a chargeback has been raised alleging an unauthorised purchase of goods or services our communication to you may ask for evidence of the following:

• Photographic/email evidence to prove the Cardholder is in possession of or has received or the goods or service.
• Cardholder signature upon pick up on form or signed order.
• For eCommerce purchases where customer details are matching cardholder information, for example, customer log in, telephone number or delivery address.
• For travel and entertainment transactions – evidence showing any other purchases during the service period or reward points earned or redeemed.
• The Cardholder no longer disputes the transaction.

Unverified eCommerce transactions

3D Secure (3DS): Is an authentication protocol designed to authenticate online transactions by providing an additional layer of security primarily through a password or a one-time code sent to the Cardholder’s phone. This reduces risk for Merchants by confirming the Cardholder’s identity before the transaction is completed, thus helping prevent unauthorised transactions and chargebacks. 3DS shifts liability for fraud-related chargebacks to the card issuer when authentication is successful. For more information, please contact the Merchant Helpdesk on 1300 369 852 or your relationship manager.

Manual key entry

If you are a MOTO merchant or we have consented in writing to you manually entering transactions using the key pad (key entry) you need to be aware of the risks. When processing a transaction manually through your terminal, i.e. keying the card number into the terminal, there are heightened fraud, and chargebacks risks to consider. Since the card is generally not physically present, the terminal is unable to confirm the Cardholder’s identity through reading the chip, or via the Cardholder’s PIN, or signature. This increases the likelihood of unauthorised parties using stolen card details.

Key - entered manual transactions are considered unsecure and the liability for any resulting fraud-related chargebacks falls on the Merchant. Always request another payment type from the Cardholder if possible and if you find you are not using key entry or are concerned about risk, we recommended that you request it is disabled on your terminal. If you do need to use key entry, we advise that keep your terminal locked and protected with a strong password to prevent unauthorised use when unattended. Never hand your terminal to a customer as this can lead to a process of an ‘unauthorised’ transaction.

Tips to reduce risk and protect your business

Limit manual key entry transactions to essential situations only. Always consider using secure methods of payment where the card is present or validated through secure technologies like chip and PIN.

Ensure all cardholder information is entered correctly. Double-check the details to minimise errors that might lead to disputes about unauthorised transactions.

Keep accurate and detailed transaction records. This can help strengthen your case in the event of a dispute.  

Monitor transaction patterns. Look for anything unusual, such as higher-than-normal transaction amounts or repeated manual entries, as these could indicate fraudulent activity.

Refunds. Always refund to the same card. Refunding to a different card or cardholder’s bank account will make challenging a chargeback difficult.

This can help protect your business from the risks associated with manual key entry transactions and reduce your exposure to fraud-or error related disputes. If you have doubts, consider calling the Merchant help desk to have key entry switched off on your terminal.

Common dispute reasons:

• Services not provided or merchandise not received
• Not as described or defective merchandise/service
• Credit not processed
• Cancelled merchandise or services
• Paid by other means or duplicate processing and Probability of Identification (POI) error transaction
• Cancelled recurring transaction
• Counterfeit merchandise
• Misrepresentation.

For further information on how to contest these disputes please refer to the Merchant Chargebacks Quick Reference Guide.

While not all chargebacks can be avoided, many can be prevented by taking proactive steps to reduce disputes and ensure smooth customer transactions.

To help minimise chargebacks, you should always provide clear product descriptions with pricing and refund policies on your website or in-store. It’s also essential to ensure your business name appears recognisably on customer statements to prevent any potential confusion, while maintain proof or purchase and delivery receipts or details.

Responding quickly to customer complaints and resolving issues before they escalate can also help prevent chargebacks, as will using secure payment methods and anti-fraud tools, especially for card-not-present transactions.

A chargeback occurs when a customer disputes a transaction with their bank or card issuer and the funds are reversed from the merchant back to the customer.

Typically, it might start when a customer lodges a dispute with their bank, stating they didn’t authorise the transaction or didn’t receive the goods or services. The bank then initiates a chargeback request, reversing the funds from the merchant’s account temporarily.

Responding quickly and providing solid documentations is key to defending against a chargeback.

As a merchant, you generally have 14 calendar days from the date you receive a chargeback notification to respond. This timeframe may vary slightly depending on the card scheme, but it’s always critical to act quickly.

If you receive a chargeback, ensure you review the reason code and details of the dispute and gather and submit all relevant supporting documentation – such as invoices, delivery confirmations, receipts and any other information that may be of use. Missing the deadline could result in an automatic loss of the chargeback.

When accepting card payments where the Cardholder or the card is not present at the time of the transaction, you need to ensure that you and your team carefully assesses whether the sale is genuine, and the actual Cardholder is the person processing the transaction. The majority of fraud-related cases are card not present, so you need to implement additional checks for these transactions, particularly for international and over the phone sales. Authorisation of the purchase does not confirm that the sale is legitimate; only whether funds are available and that the card has not been reported as lost or stolen.

You will be sent a debit notification (prior to your account being debited) for a chargeback via email or letter. You will be advised of the relevant information required by the Chargebacks Team to challenge the chargeback.

If you have registered for our Electronic Reporting System (ERS), we will notify you that the requested information has been received. Therefore, we strongly recommend you register otherwise letters will be sent to your nominated mailing address potentially causing delays in advising an outcome.

You will be advised of the chargeback details before the amount is debited from your account. Keep your mailing address details up to date with NAB to ensure you receive any written notifications. Also check your email address is correct when registering for the Electronic Reporting System (ERS).

The chargeback fee is debited from your nominated settlement account ($25 AUD) as chargeback fees are outlined in your Letter of Offer and your obligation to pay them is contained in your Merchant Agreement.

The chargeback fee covers the administration cost incurred for processing a disputed transaction. This fee is charged when a Merchant is found liable for a chargeback. We generally are not able to reverse or exempt chargeback fees for any chargebacks, but you may discuss the chargeback fee with your Relationship Manager or the Chargebacks Team.

If the decision has been made in favour of the Cardholder, your account will be debited, and you will be advised of the reason. It could be due to insufficient evidence to challenge the chargeback. You can request a review by contacting us on 1300 781 935 (option 3) or via email without delay to ensure your chargeback case is reviewed in a timely manner.

Fraud is commonly only identified when the genuine Cardholder receives their credit card statement and identifies a transaction they did not make. The transaction is then disputed, and the investigation reveals that fraud has occurred.

The key entry feature is only available with our consent and transactions accepted using it are classified as ‘Card Not Present’. This is because the card data is not read by the terminal, and it is difficult to prove the card was present at the time of sale. If a card cannot be recognised or processed via the terminal, you should think carefully about key entering the transaction as you will be liable for the transaction if it is disputed. Always request another payment type from the customer if possible and if you find you are not using it or are concerned about risk, we recommended that you request key entry is disabled on your terminal. If you do need to use key entry, we advise that you keep your terminal locked and protected with a strong password to prevent unauthorised use when unattended.

You are required to respond to requests for information within the timeframes provided. If you require an extension, you will need to contact the Merchant Chargebacks Team to see if there is still time within the relevant Schemes rules. For these reasons we strongly recommend you are signed up to the Electronic Reporting Service (ERS) to ensure timely notification and response times for any disputes raised against you.

If you have raised the issue with NAB but do not feel it has been resolved to your satisfaction, you can contact the NAB Resolve Team on 1800 152 015. If after referral to NAB Resolve your concern is still not resolved to your satisfaction, you can lodge a complaint with the Australian Financial Complaints Authority (AFCA): Website: https://afca.org.au, opens in new window Email: info@afca.org.au Telephone: 1800 931 678 (free call) or in writing to: 

Australian Financial Complaints Authority
GPO Box 3
Melbourne VIC 3001
Australia

AFCA is an External Dispute Resolution (EDR) scheme to deal with complaints from consumers in the financial system. AFCA provides fair and independent financial services complaint resolution that’s free to consumers.