Chargeback on "card present" creditcard transaction...?


#1

A recent thread in a local Facebook buy/sell group got me wondering. I know chargebacks can be readily obtained on “card not present” transactions where, for example, the merchant failed to deliver the goods.

In these instances the liability is primarily on the merchant, though if they failed to make good then their card processing bank would have to pay, followed by the card holder’s bank.

However, what is the situation for a card present transaction? Do the rules of the card schemes require the merchant’s bank to also make good in this case? Or are these transactions non-recourse?

Link to the article which prompted the Facebook discussion:
PK Furniture goes into receivership


#2

Hi @michaelnz, great question!
The team has assured me that the same rule applies with regards to goods or services not provided - the customer has protection whether the card is present or not.

If a customer paid for goods or services with their Credit card, and the good or service was not provided by the merchant, then the scheme rules apply (even if the merchant is in liquidation ).

The customer needs to raise a chargeback request with their bank and their bank in return will claim the funds from the merchants bank and pay the customer out.