The complainant was scammed into making an EFT (Electronic Funds Transfer) payment for a holiday. After realising he was scammed, he requested the Bank to effect a chargeback.


The Bank advised that they are only able to process chargebacks where a card was presented for payment, authorised, and approved through a merchant terminal; this would include either a POS device or e-commerce gateway. Chargebacks are not possible when payment is made by means of an EFT.


The question posed was whether, however, the Bank is entitled to, or should have done, a chargeback on the transaction.


It must be noted that chargebacks are rules created to regulate merchants who initiate payments from cards issued by the relevant institutions (Mastercard/VISA/ American Express etc.) to a cardholder. The rules provide how a merchant can process a payment using the card/ card details.


Should a merchant fail to comply with the rules there will be a chargeback right.


Therefore, only when a merchant uses your card (initiates the payment with one of their payment methods) for example, via a point of sale device or online payment service and does not comply with the card rules will the cardholder be entitled to request a chargeback.


In other words, debit/credit card disputes do not deal with Internet Banking Transfers (EFTs), but with Banked POS (Point of Sale) purchases only. The Bank can only assist with services when the purchase was conducted with the card.


Therefore, an EFT is considered a cash transaction where the payment method used transfers the funds directly to the party you intend to pay. Further, an EFT is regulated by the Payment Association of South Africa which provides that a Bank cannot reverse funds without the account holder’s consent, a reversal of the funds is also not possible if the funds have been fully or partially utilised.


Therefore, the Bank could not effect a chargeback on the disputed transaction.


Principle: There are specific rules governing chargebacks and Banks are obliged to adhere to these rules.

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