Chargeback Policy

A. Introduction

Chargeback is a technical term used mostly by international card schemes to represent the refunding process for transactions carried out on card following the violation of a rule. Chargeback was originally developed to protect consumers in the case of fraudulent authorization of payment transaction with their cards. Beyond protection of customers from the effects of criminal fraud such as identity theft, chargebacks serve as a deterrent to merchants who might be tempted to sell sub-par products or services.

Today, however, online payment options are diverse and go beyond the use of cards, to include, particularly in this part of the world, mobile money. These come with peculiar features which cannot be overlooked in defining remedies for consumer protection as well as the protection of merchant interests.

Nsano resolutely believes in the role it plays as a payment service provider towards fostering the health and stability of the online payment system and is dedicated to paying its quota towards its ultimate success.

B. Purpose

Nsano’s chargeback policy has been developed in response to incidents of customer abuse through fraud, negligence by merchants, system hiccups etc., to ensure customer protection in electronic payment transactions and through the implementation of remedies and to provide a framework for merchants to optimize the user experience for online payment transactions.

C. Scope

This policy is guided by the Bank of Ghana Guideline on Operation of Electronic Payment Channels in Ghana. It covers areas of customer protection, and encapsulates the relationships Nsano has forged with merchants, third parties and payment services providers in operating as a licensed payment provider in Ghana

D. Nsano's Chargeback Policy

1. Nsano as a payment gateway provider & merchant aggregator for web acquiring services (card transactions)

Among participants in a card transaction, Nsano plays the role of a payment gateway provider and provides merchant aggregation services for web acquiring services. Nsano thus acts as an intermediary between merchants and acquiring banks/ payment processors.

In operating as a payment gateway provider, Nsano acts as a facilitator on behalf of a customer to enable a payment transaction. It also has among other responsibilities, payment data security and ensuring the non-storage of customer details on a server maintained by either a Payment Gateway Provider or a third party without a security audit undertaken by a Qualified Security Assessor.

A chargeback situation, which ultimately results in the final burden being borne by a merchant could be invoked by complaints by a customer in the following occurrences;

Incorrect transaction amount

In this case, disparities exist between what a cardholder agrees to pay and the actual amount that is deducted after a transaction. This could occur due to number transposition, data errors when the transaction is entered for data processing, or it may result from a misunderstanding about fees or taxes included in the final price.

Duplicate transactions

Here, transactions are processed repeatedly resulting in a charge to a cardholder’s account in multiples of the actual payment transaction value.

Cancelled or uncompleted pre-authorized transactions

In the event of failure to implement an instruction to cancel subscriptions, unauthorized payment processing occurs creating the need for a refund to the cardholder.

Merchandise/service not received

Failure to deliver products or agreed services to the customer or non-receipt of goods by the scheduled delivery date, form valid reasons for which a chargeback may be applied.

Misrepresentation of good and services

In this case, products are defective or fail to match the description provided prior to payment authorization.

Fraud-Card absent environment

Of all the premises for a chargeback stated, fraud forms the most substantial basis for a chargeback claim. This includes the fraudulent addition of charges by some merchants, use of card details by an unauthorized person (identity theft) etc.

Operationalization of the Chargeback Policy

Whereas neither the process of performing debit nor credit transactions occur on our platform, our role in the payment processing chain makes us a relevant party/ stakeholder in a typical chargeback process.

Chargeback Burden

Principally, chargebacks involve withholding of funds received by merchants/third parties illegitimately through scenarios such as those mentioned above, and the reversal of funds to customers.

Following established procedures by the Regulator, as it applies to Nsano and merchants/ third parties, when a chargeback procedure is approved, deductions are effected against an acquirer’s clearing account. Such deductions are then applied by the acquiring bank against settlements due merchants/third parties, which we hold in trust until settlement is done. Such chargeback deductions are finally borne by the merchant. Funds may be withdrawn from the virtual accounts held in favor of a merchant/third party or deducted prior to the settlement for transaction.

Nsano shall be responsible for providing details on a chargeback claim to merchants/third parties.

Applicable fees

Funds withheld or deducted from merchant accounts will be limited to the amounts which is unduly debited from our account by the acquiring bank.

Remedies for Merchant/Third Party

Merchants bear the ultimate responsibility for a fraudulent activity or negligence which occurs on their platforms. However, in some instances a dispute may occur with a merchant/ third party contesting a chargeback claim made against it by a customer. A merchant/ third party may seek redress or rebut a chargeback claim once it believes and can prove the authenticity of transaction (on which a customer lodges a complaint), from the acquiring bank.

2. Nsano as a Mobile Money Aggregator

Nsano in its role as a mobile money aggregator provides APIs to merchants and third parties for the processing of mobile money transactions. Relevant stakeholders thus include mobile money operators, merchants and third-party application providers or PSPs

Application of Chargebacks on Mobile Money Transactions

A customer/ authorized holder of a mobile wallet may lodge a complaint requesting for a chargeback on transactions processed through our platform. The basis of such complaints may include the enlisted scenarios under card transactions.

Fraudulent activities particularly in relation to MTN MOMO prompt APIs would invoke a chargeback against a merchant/ third party.

To prevent such occurrences and to reduce an entity’s risks for chargebacks the following should be adhered to;

Restriction of payment wallets to originating MSISDNS

The origination wallet accessing the application is the only number that should receive the payment prompt for authorization.

Wallet binding in the event of secondary account usage.

In situations where the originating/receiving account is linked to another account type e.g. bank account or mobile app, a user ID application should enforce wallet binding with authentication methods such as OTP confirmation.

Close ended systems with collection accounts

Third party application design is to have a service rendering model. Any other model with a compelling business case and relatively low risk profile will have to be discussed with the Nsano team for clearance.

Restriction of processing to only authorized payment service provider

This action is in accordance with guidelines issued by Bank of Ghana on the operation of a payment service provider.

Non-processing of prohibited transactions

This includes but is not limited to virtual or digital currencies such as Bitcoin and money laundering activities on the platform. (Ref. NOTICE NO. BG/GOV/SEC/2018/02).

Notice of SLA breach

Merchants/third parties should provide feedback upon the receipt of a notice given within twelve (12) hours after a fraudulent transaction is reported to the PSP for investigations for possible retrieval of funds.

Fraud on a PSP or merchant’s application

Sub merchant transactions

Where a PSP acquires a merchant to provide transaction processing and payment services, the PSP shall:

1. Not on-board any sub merchant unless it has conducted proper due diligence, risk assessment and Know Your Customer Checks (KYC) on the sub merchant. The PSP shall indemnify Nsano against any losses, claims or penalties arising from a failure to perform or meet such KYC requirements.

2. Grant Nsano access to all necessary information and documentation including all processes, procedures and standards and any other documentation of the sub merchant which Nsano shall require for the performance of its obligations or in compliance with any regulatory requirement.

3. Enter into an agreement with each sub merchant which sets forth the terms applicable to the sub merchant’s acceptance of payments.

4. Notify Nsano prior to the onboarding of any sub merchant.

5. Ensure and implement measures to ensure that the sub merchant does not exceed a chargeback ratio of 0.3%. Nsano maintains the right to terminate this Agreement where there is a breach of this chargeback ratio by the sub merchant.

Operationalization of Chargeback Policy (Mobile money transactions)

Chargeback procedure

A chargeback procedure is Initiated after a customer complaint is lodged, there is an identification of fraud or irregularity on our platform. The following steps would be undertaken;

Investigation to ascertain legitimacy of claims/ findings

Deduction of funds from virtual accounts of merchants/ PSP involved and crediting of customer (or applicable party)

Communication of deduction to merchant/PSP/third party

Re-presentment by PSP, merchants or third party in case the chargeback is disputed

Applicable fees

The amount of funds withheld as chargeback shall be an equivalent to the amount involved in the transaction.

Remedies for merchant/third parties/ payment service providers

Dispute resolution

The affected entity may file a re-presentment on the chargeback by communicating in writing, and with substantial proof that the basis for the chargeback is flawed, to the address below;

The Head
Risk & Compliance
Nsano Limited
P.O. Box YK 1320
Kanda Accra

In the event that the parties do not come to an agreement on the application of a chargeback, both may resort to arbitration under the Alternative Dispute Resolution Act, 2010.

Chargeback Ratio

PSPs and merchants processing transactions through our platform, are required to operate within the confines of the 0.3% chargeback ratio (the number of chargebacks to the total count of successful transactions). Exceeding the chargeback ratio limit could result in the termination of the Agreement between a PSP/ merchant/ third party.

Merchant & Customer Awareness & Education on Chargeback

Nsano maintains a responsibility towards it partners (merchants, third parties and PSPs) as well as its end users for awareness creation, mitigation of occurrences that result in the need for chargebacks and providing the needed education to partners to ensure the reduction of the same.

Nsano’s policy on Customer Protection and Awareness Measures, Support and Complaint Procedure, shall be standard guiding document for customer awareness and education on the company’s Chargeback Policy.

As part of partner onboarding, preliminary information would be provided in relation to Nsano’s Chargeback Policy. Sessions would also be scheduled biannually for the evaluation of partner platform and activities and for the purpose of training where required.