Why do chargebacks occur?

Card schemes including Visa and MasterCard outline which chargebacks are automated and which can be disputed. This means some chargebacks with a fraud or authorisation reason code will be automated and the chargeback will be debited from the merchant's bank account. 

If a chargeback doesn’t meet the necessary criteria as outlined by the schemes, the chargeback will be declined and returned to the cardholder’s bank. 

Individual schemes outline which chargebacks are automatic and which ones merchants can dispute. Some processing error or consumer dispute chargebacks can be disputed. 

• Download the Visa chargeback guideline 

• Download the Mastercard chargeback guideline

You'll need to provide documentary evidence to support your claim. If you haven’t provided satisfactory evidence, the dispute may become an automatic chargeback and your account will be debited.

To reduce the risk of chargebacks caused by customer disputes, it’s important you keep detailed transaction records showing that each cardholder has received the goods or services they’ve paid for. This may include signed and imprinted sales receipts and any other relevant sales information.

A transaction can generally be disputed up to 120 days from the date of the transaction or the delivery date, whichever is later, so we recommend keeping your transaction records for at least six months to make it easier for you to find evidence of a specific authorisation. However, it’s important to note that Mastercard® and Visa® allow some chargebacks to be raised up to 540 days from the date of purchase.  

To ensure your records will be sufficient to dispute a transaction, your invoices, contracts and promotional materials should always include: 

• Business name as it appears on a customer’s statement

• Business address

• Customer service contact details 

• Return and cancellation policy details

• A complete description of goods and services provided 

• Debit dates for regular instalments, such as memberships or subscriptions

• For invoices, a complete description of the goods and services you’ve provided as well as a specific delivery time (if relevant) 

For chargebacks relating to authentication (verification of the customer identity), Mastercard® and Visa® have an automatic resolution process. This means, in most cases, merchants are automatically debited and cardholders refunded.

While we understand it can be frustrating to be debited before the case is decided, we need to ensure that funds are available for the cardholder if the chargeback is decided in their favour. Should the case be resolved in your favour, the funds will be returned to your settlement account as per the original transaction. 

For more information, contact our Merchant Chargebacks team on 1800 649 205 (9am–5pm Syd/Melb time).

If we are notified that a cardholder has disputed a transaction for any of the above reasons, we'll send you a debit notification via email or post and debit your account immediately. The notification will explain why your account has been debited. As there may be no recourse of appeal, you may wish to contact your customer in order to arrange an alternative payment method or recovery of the amount.

You can add an authentication protocol like EMV 3D Secure to transactions, which can help to prevent fraud for eCommerce and online payments. It works by quickly verifying customers, so they still get a smooth payment experience, but with added security benefits. You get increased protection against disputes and chargebacks relating to fraud.  

The liability for all manually keyed transactions (MOTO) sits with you as the merchant. You should be careful when processing these transactions, if you choose to accept them.

Be aware of fraud risks – it’s a common technique used by fraudsters to present a stolen card or stolen card numbers and claim the original card is damaged.

If you don't want to process manually keyed or damaged card transactions, call us on 1800 230 177 any time to turn this off.

Previously all correspondence from the Bank was sent out by post, as this was the only channel available at the time. Now we can send chargeback letters to your email address. These will arrive same day as the debit, so you can maximise the time available to prepare the necessary information.

To register for email updates, call us on 1800 230 177 any time so we can verify you.

In general, most cases will have 120 days period to raise a chargeback. However, rules from Mastercard® and Visa® allow some chargebacks to be raised up to 540 days from the date of purchase. Best practice means you should be keeping all purchase-related material for a minimum of 540 days.

If a chargeback case has been raised against your business, do not process a refund to your customer. 
You need to wait for the case to be resolved, and if a refund is required, it will be processed through the chargeback process. If you process a refund during this time, you may still be liable for the chargeback refund.

When you are processing refunds in future, you should always put these through the same card that the customer used to make the payment. If you use any other channel to process refunds (like bank transfer, cheque, Western Union money transfer or transfer to a different card) then you will still be at risk of chargebacks on the original transaction.