Protect Your Business from Disputed Credit Card Transactions

According to the latest data from the Australian Payments Network (AusPayNet), total credit card fraud losses reached $577 million in FY2023, a 16.5% increase year-on-year. Of this, Card-Not-Present (CNP) fraud — transactions made online or by phone — made up 87.2% of all card fraud, continuing a concerning trend from previous years.

Disputed credit card transactions often stem from fraudulent activity, mistaken charges, or customer dissatisfaction, and can lead to a transaction dispute or chargeback—where the funds from a transaction are forcibly reversed back to the customer according to chargeback rights. This not only affects cash flow but also puts merchants at risk of penalties, reputational damage and costly dispute process overheads.

The Australian Competition and Consumer Commission (ACCC) also reported that in 2023, scams resulted in a record $3.1 billion in losses, with business email compromise and invoice fraud playing a major role in disputed payments and lost funds. Scams impact all types of transaction including eftpos debit card, direct debit and BPay but the chargeback rights and card transaction dispute processes in the card scheme rules make it particularly challenging for merchants to protect themselves from losses due to scams.

For more on common scam types, visit Scamwatch’s scam categories.

Understanding how fraud happens is key to prevention. Common forms of card account fraud in Australia include:

• Card-not-present (CNP) – Online and phone payments without a physical card.
• Counterfeit and skimming – Copying credit or debit card details via terminals.
• Lost and stolen cards – Unauthorised transactions used without owner consent.
• Card-never-arrived fraud – Intercepted during delivery.
• False applications – Applying for cards with stolen identities using a fake or stolen ABN.
• Scam – an authorised cardholder induced to incur a charge against their card account for a payment that is not what it purports to be, for example, someone using the merchant name or trading name of a well known business that is not their own.

A chargeback is when a cardholder or additional cardholder initiates a transaction dispute and requests their bank to reverse the charge through Visa, Mastercard, American Express or other schemes. While chargebacks were designed to protect consumers, they’re increasingly misused, with some customers initiating them fraudulently after receiving goods or services.
Disputes aren’t limited to credit cards. Debit card users also file transaction disputes resulting in dispute resolution that can result in reversal of funds, even when there’s no fraud involved
The rise in eCommerce and digital wallets since the pandemic has made chargebacks more frequent and harder to resolve. Many disputes fall outside of the ideal timeframes, forcing merchants to absorb losses and handle extra admin.
Each card transaction dispute results in:

• Chargeback process overhead for the merchant
• Potential product or service loss
• Loss of transaction amount as well as reversal fees and penalties
• Reputational damage with payment providers

Azupay reduces traditional credit and debit card risks by enabling instant, account-to-account payments using the New Payments Platform (NPP). With single-use PayID technology, every payment is securely linked to a unique identifier, dramatically reducing the risk of fraud and unauthorised disputes. Our unique PayID and PayTo based solutions include well structured information, specific to the purpose of each transaction and controlling the merchant name and trading name, helping your customers protect themselves (and you) from scams as well as managing risk of other types of fraud.

• Fewer chargebacks –  Instant, final payments, means less chasing and fewer disputes.
• Reduced fraud exposure – No card data or personal info shared.
• Real-time settlement – Get paid instantly, 24/7.
• Lower costs – No interchange or scheme fees.
• No duplicated transactions – Unique PayIDs means no duplicated transactions
• Works as a safe and modern alternative to outdated direct debit, BPay and card processing systems.

By removing cards from the equation, businesses can protect themselves from the rising tide of transaction disputes and fraudulent chargebacks.
Azupay operates with an Australian Financial Services Licence (AFSL) so while there are no chargeback rights automatic with our payments your customers their rights as a consumer remain protected and fraudulent transactions will still be resolved through a fair dispute resolution process.

Disputed credit card and debit card transactions, fraud and chargebacks are becoming an unavoidable cost of doing business unless merchants act now to adopt safer, smarter payment methods. Azupay offers a future-proof solution that keeps both your business and your customers safe.
Contact our Sales team today at [email protected] and discover how Azupay can help.
Be safe. Azupay.