A customer makes a chargeback request at their bank when they haven’t received value for a payment they made to a merchant. When the chargeback request is made, the merchant has to provide proof that the customer indeed received value for their payment. If this is not provided, and the merchant fails to resolve the chargeback, the payment would be reversed to the customer.
The timeline for this resolution by the merchant on Paystack used to be 24 hours - with weekends and internationally-recognized public holidays excluded. However, due to a new regulation by the Central Bank of Nigeria (CBN), the timeline for responding to chargebacks has now been adjusted from 24 hours to 16 hours.
From June 9, 2020, merchants will need to respond to a chargeback within 16 hours or the chargeback will be auto-accepted. When a chargeback is auto-accepted, the full transaction amount will get deducted from the merchant’s payouts and be reversed to the customer.
We sincerely empathize and apologize for the inconvenience this will cause as we work to accustom ourselves to the new change. The rules are intended to strengthen consumer protections for buyers, and build trust in the online payment system for your future customers. Here are some steps we're taking to help your business cope with this change:
- We currently send well-timed reminders when you have a pending chargeback claim so you can resolve it as soon as possible. These reminders are sent every 4 hours till the chargeback claim is responded to or auto-accepted.
You can confirm and update the email addresses we would be sending dispute notifications to in the Disputes Email field under the Compliance tab of the Settings page.
- Our Disputes team has put together a comprehensive guide on How to resolve chargebacks. It includes examples of the best kinds of evidence to submit as proof of value.
- We recently launched the Paystack Merchant app and we'll soon be making an update to allow you to be notified via the app when you have a new chargeback, and also allow you to upload proof of value via the mobile app.
- The Paystack API has an endpoint that can allow your system to automatically respond to disputes. If your business receives a large number of chargebacks, we strongly recommend implementing this on your end for quicker resolutions. You can find more information on the Paystack Developer Documentation on how to implement this.
The CBN directive states a maximum resolution time of 72 hours. Why are we being given a deadline of 16 hours?
The deadline of 72 hours in the press release is directed at the banks. The banks, in turn, communicate a shorter deadline with our team as they receive multiple chargebacks from different payment service processors they need to process and send.
Can chargeback deductions be reversed after the timeline has elapsed and the chargeback auto-accepted?
Unfortunately, no. Once the chargeback is auto-accepted, the funds are sent to the customer and can't be retrieved from their bank account.