Lot of interesting posts on credit cards and disputes. Here is few more for your consideration..
Please note, got nothing to do with mongering so my usual statutory warning holds good for this as well !!
The dispute and chargeback is one of the most regulated and highly controlled process in payment card industry, for the simple reason of the potential fraud !! The laws of disputes and chargebacks is not governed by credit card company or merchants but by network/ settlement processors.. i.e. MasterCard, Visa, Amex and for those in US who have Discover cards. So the process is standard across all issuers and merchant acquirers and merchants..
When a transaction is disputed by a customer to the card issuing bank, the bank takes it to network provider (say mastercard), who will then take it with merchant acquirer. The merchant acquirer is typically another bank who holds merchant account or who has provided the POS to the merchant. The acquirer then takes it with merchant !!
So given the parties involved , it is not a simple process and it will be vigorous checks done depending on the money..
The general principle is, if the card is chip and pin, but merchant bypasses it and takes signature, then in case of dispute the responsibility of chargeback lies with the merchant. They take the risk
If the card is chip and pin and a valid pin is used to authorise, then the card company has the responsibility to provide all the info. So in the example provided, it will be card company of CP who is responsible to prove it is a fraud out of lost/ stolen card.
Given that it has happened in India with a US issued card, they will go to the extent of verifying passport entries etc. , Again depends on the amount involved.
In India, RBI has mandated that all cards issued after Jan 2016 has to be chip and pin and any transaction after 31st Dec 2018 has to be pin authorised. If an transaction after this date is not pin authorised, then the dispute ownership will be with merchant and they tend to lose.
If there are any issuers in India still provide signature based cards, then in dispute they are liable. I don't think there is any issuer in india who has non chip and pin card in circulation.
In US , it is still not a banking law yet and therefore lot of non pin cards are still active. That is the reason why most stores in US still have signature pads. If you use these type of non pin cards in India, 99.99% of merchants will decline or or not accept it, due to the reason mentioned above. Merchant takes the risk of dispute settlement..
On the 2.5% transaction fee, there is concept called interchange fee. This is the fee that the network providers charge the merchant for providing the infrastructure.. ie.e, when you buy a good for say Rs 100 using a card, at authorisation, the merchant POS will send it to acquirer, who will send it to network, who will send it to issuer who will then check if you have balance, card is good etc. and then sends approval message back to merchant in same route. All happens in milliseconds !!
On settlement, merchant will send end of day report to acquirer, who will consolidate for a network (all MC to MC, all Visa to Visa etc) and send it to them.. Processors will then send final bill to an issuer.. when Settling, the issuer will only send 99.50 to network, who will then send only 99 to acquirer who will then send only 98.50 to merchant.
When the customer receives statement, they pay 100 to their issuing bank. So the bank has made 1 RS for providing credit to the customer. 50 paise by MasterCard or Visa or discover and 50 paise by acquirer who provided the POS to merchant. This is interchange fee. In most countries where cash transactions are very low and cashless is very high, the merchant who expects to sell a good for 98.5 automatically marks up to 100. So he is not at a loss.if a customer makes cash payment, he is actually make 1.50 more profit !!!
In India , since cash is king, merchants still sell (or atleast we think) for 98.50, so when credit card is used , they eventually get only , say 97, so at loss !! That's why most merchant charge 2.5% more.
But Basel II and PSD I regulations have greatly reduced the interchange fee that networks can charge , which I think is now 0% for debit cards and 0.1% for credit cards.. so there should be no 2.5 surcharge, but merchants in India use this as another money making enterprise!!
Lastly, most issuers treat casino transactions as cash advance, so there will be can advance fee and you will start paying interest from that day onwards as there is no grace period like it is for purchases. So anyone on las Vegas trip, use debit cards !! Not applicable for DBs as they still register as restaurants, but since they are giving cash immediately which they get settled only end of the month from. acquirer, they would want to charge interest !!
And finally (since I already used lastly), please take into account Anglos warning about using CC in bars. Not from fraud, but leaving a paper trail that can cause domestic issues !!
Most bars have strange names (like A ONE restaurant for Malvan Kinara, Shayadri restaurant by guruprasad in Chembur), but when your wife sees the amount , it will not go well !!
Regards
Basu
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