UBA, Zenith Pioneer Implementation of Chargeback on PoS Transactions

UBA and Zenith bank are pioneering central bank of Nigeria (CBN) directive on implementation of 24 hours chargeback dispute resolution mechanism on transactions on point of sale terminal, Nigeria CommunicationsWeek has learnt.

Chargeback is when a customer buys goods or service at a point of sale terminal and was debited but the PoS did not print receipt showing a successful transaction, because the transaction was decline, the merchant will refuse to give the customer the goods he requested for, while his account has been debited. In this situation, the customer will have to go to his own bank which is not the bank of the merchant and file a claim of refund that is called chargeback.

Before the new CBN directive of its resolution within 24 hours, the problem is resolved by the customers’ bank logging it against the merchant and the merchant bank needs to investigate if that claim is correct or not, if it is true he did not give the customer the value, he will attest to the bank that it is true and for his bank to return the money to the customer. This process takes weeks to resolve.

Against the frustration merchants and financial inclusion agents are facing as a result of issues around chargeback on PoS transaction that CBN gave directive to banks to implement 24 hour chargeback dispute resolution mechanism of which UBA and Zenith have started implementing.

Commending the two banks, Fasasi Sarafadeen Atanda, managing director, Ecosystem Hybrid Network, an agent network operator said that UBA and Zenith are in the first to begin the implementation of the CBN directive that anytime customers have dispute issue the only thing they need to get from Agent is to get a receipt supporting that decline.

“Once you have that receipt, take it to your bank and collect your money, they are well prepared to follow the money anywhere it hangs whether it is hanging at processor, or banks, they can view it from their backend to know where it is hanging and retrieve it to credit the customer.

“This will reduce the time customers waste waiting and also engender truth in the system, which will help agents grow customers because they know when they have issues their bank will attend to them unlike previously when their bank will ask them to go back to follow up Agents.

“We are going to see fewer cases of police arrest when there is no dispute; there won’t be any need to invite police.

“The only thing that remains is for all the banks to commence implementation of this CBN directive on chargeback.

“PoS usually produce two receipts, merchant copy and customer copy, if it shows approved definitely the customer must pay but if it show decline customer cannot pay. It is the decline receipt that should be taken to the bank for refund.

“Financial inclusion in Nigeria is driven through three providers that includes bank led, mobile money operators’ led and mobile network operators’ led these are the digital financial services channels.

“For bank led, we have solution for dispute now and we encourage all of them to abide by that, the same thing should happen to mobile money operators’ led as they don’t have branches everywhere where customers can go but they have aggregators they should work with their aggregators, provide their addresses and location for customers to go in case of dispute arising from cash back.

“As mobile network operators’ led is gradually coming up, they should put in place dispute resolution mechanism just like the banks have just done.

“With this dispute resolution mechanism in place there is going to be a surge in the use of agents in the financial inclusion programme. Trust have been militating the use Agents for transaction making people to rather go to the banks than use Agents for transactions.

“Agents are not legally allowed to intervene on behalf of customers in case of dispute because they are regarded as third party.

A lot of agents have closed down as a result of dispute issues with customers, but with this directive been implemented by the banks; they will start opening shops again,” he added.