What’s a chargeback?

  • A chargeback is a reversal of a credit card payment that occurs when a cardholder disputes a transaction they didn’t authorise. This means you don’t get paid for the goods and services relating to the transaction, even if you’ve already provided them. You may also have to pay fees for the chargeback to be investigated and processed. 

    The cardholder’s bank (credit card issuer) can make a chargeback on the transaction if the:

    • Card wasn’t valid at the time of the transaction
    • Goods and Services purchases were not received
    • A Periodical Authority has been cancelled but the merchant continues to debit
    • Good and Services were paid for by other means
    • The transaction has been duplicated
    • The merchants promised a credit that has not been processed
    • The goods and services purchased were not as described or defective
    • The incorrect amount was charged
    • Sales receipt is changed without the cardholder’s authorisation
    • Transaction was processed to your own credit card
    • Transaction amount is above your floor limit, but this amount wasn’t authorised
    • Transaction was made to refinance an existing debt or collect a dishonoured cheque

    If we are notified that a cardholder has disputed a transaction for any of the above reasons, we will contact you via email or letter and ask for supporting evidence depending on the dispute reason. 

    Generally, a cardholder can dispute a transaction for any of the above reasons. If you can’t prove that the cardholder authorised the transaction, then you’ll be liable for the chargeback.

Fraud chargebacks

  • The key difference between a chargeback and a fraud chargeback is that in the case of a fraudulent transaction, the chargeback amount is automatically debited from your account, even if you’ve already provided the goods or services.

    The cardholder’s bank (credit card issuer) can make a fraud chargeback on the transaction if the:

    • Transaction is illegal or prohibited
    • Cardholder didn’t authorise the transaction
    • Cardholder says they’re not liable for the transaction
    • Authorisation for the transaction is declined

    If we are notified that a cardholder has disputed a transaction for any of the above reasons, we will 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.

How the chargeback process works: 

    • A dispute is raised against you, the merchant, by the cardholder or the cardholder’s bank
    • CommBank receives notification of the dispute and will notify you via email or letter. In the event of a fraudulent chargeback, we will debit your account immediately
    • You may disagree with the dispute. If so, you may be asked to provide supporting evidence depending on the dispute reason to CommBank. Instructions will be provided within the letter or email
    • If the cardholder dispute is resolved in the merchant’s favour, the chargeback request is returned to the cardholder’s bank and the cardholder must pay their statement
    • If the cardholder dispute is not satisfactorily resolved or supporting evidence not provided within the required timeframe, the chargeback will remain in place

Chargeback frequently asked questions

    • You didn't give me the opportunity to challenge this chargeback

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

    If you have further questions, please contact our Merchant Chargebacks team on 1800 649 205 (9AM – 5PM AEST) or by email at MerchantChargebacks@cba.com.au.

    • I wasn't notified before the debit occurred

    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.

    • I didn't realise how risky manually keyed transactions are

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

    Be fraud aware – a common technique used by fraudsters is 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, contact us at 1800 230 177, 1 to turn this off.

    • Why didn't I receive the letter requesting information for the chargeback?

    Previously all correspondence from the Bank was sent out by post, as this was the only channel available at the time.

    Today 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.

    If you would like to register, please contact us at 1800 230 177 so we can verify yourself and your email address. If you are the facility owner, alternatively you can email us at MerchantChargebacks@cba.com.au

    • How long should I keep my receipts?

    The 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.

    • Why shouldn't I just refund the customer?

    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 (i.e., bank transfer, cheques, Western Union money transfer or transfer to a different card etc.) then you will still be at risk of chargebacks on the original transaction.

Minimising your risk of chargebacks

  • To reduce the risk of chargebacks caused by cardholder disputes, it’s important to have complete and up-to-date transaction records. A transaction can 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. This will make it easier for you to find evidence of a specific authorisation. 

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

    • 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)

    To learn about how you can protect your business from the risk of fraudulent credit card transactions, go to our Protecting your business page.

    For more information about the chargeback process, please refer to the Merchant Agreement.

  • On 13th April 2018, Visa introduced new chargeback rules for all merchants, cardholders and banks to ensure that chargeback processes are applied consistently all over the world.

    What changed?

    • Automated dispute decisions. Card schemes including Visa and MasterCard, outline which chargebacks are automated and which can be disputed. The changes mean some chargebacks with a fraud or authorisation reason code will be automated and the chargeback will be debited from the merchant's bank account.
    • Fewer invalid customer chargebacks. 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. Merchants can expect to see a reduction in invalid chargebacks disputes initiated by cardholders.

    Does this affect the number of chargebacks merchants receive?

    Under the new chargeback process, schemes will automatically determine if a chargeback is valid or not. If the chargeback is invalid, it will be returned to the cardholder’s bank – and merchants won’t need to do anything. This means merchants may receive fewer invalid chargeback disputes in future.

    Can merchants still dispute chargebacks?

    In some circumstances, merchants will still be able to dispute a chargeback. Schemes outline which chargebacks are automatic and which ones merchants can dispute. Some processing error or consumer dispute chargebacks can be disputed. 

    What happens if merchants dispute a chargeback?

    If merchants dispute a chargeback, they will need to provide documentary evidence to support their claim. If merchants haven’t provided satisfactory evidence, the dispute may become an automatic chargeback, and their account will be debited.

    What documentation is important to keep?

    To reduce the risk of chargebacks caused by customer disputes, it’s important merchants 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.

Things you should know    

  • As this advice has been prepared without considering your objectives, financial situation or needs, you should, before acting on the information, consider its appropriateness to your circumstances. Please view our Merchant Agreement, Financial Services Guide and Operator and User Guides at our Merchant Help Centre.