What you need to know about POS charge back

Can your bank forcefully remove money from merchant accounts?

With the emergence of various electronic payment systems in the country, the complexities around chargebacks keep increasing daily.

Point of Sales platform popularly known as POS is one of the most Patronize points in Nigeria due to its availability in almost every part of rural communities. Places with little or no financial education. Because of this, it's a very lucrative business and merchants are cashing out big time from these ventures.

Also, it's an avenue for these merchants to take advantage of people who are not enlightened on how these platforms work. Many times, when transactions are declined the customers are still debited for transactions they don't get values for and when they meet the merchants, they will simply say go to your bank and request for a chargeback form. This is just an easy fix for the merchant because some of these transactions do not impact their accounts until the Transaction date plus one day.

For a merchant who does proper balancing on a daily basis, he will understand that his account is in excess and he can simply fish out the difference. This is not the case as most of them lay claims to these overages and failed to credit the affected customers.

So what happens when the affected customer visits his bank? The bank office log for a chargeback against the acquirer. The acquirer is giving a timeline to produce the receipt of the successful transaction, if they are unable to get the receipt, the merchant accounts will be credited. Guess who's going to provide the receipt of the successful transaction- the merchant himself of course.

When the merchant produces the receipt, the chargeback is declined. The customer won't be able to get his funds as promised.

At times the banks print this receipt and ask the customers to visit the merchant as evidence that the transaction was successful at their point. Some merchants will still refuse to part with these funds, insisting that their bank should forcefully remove the funds from their accounts.

Let me clarify something at this juncture, No bank can remove any funds from a customer’s account except they have the customer’s consent or court order which gives direct order. The only occasion funds can be removed is when they are unable to provide evidence of the successful transaction.

Nigerians need to be vigilant and understand how this system works so that they will not be tossed around by these merchants. The first line of defense is you before you slot your card into that terminal, ensure you ask questions. Don't just put your cards into any available ones.