Returns and Chargebacks

A transaction is “Returned” when the settlement of transaction is reversed on account of insufficient balance, inappropriate authorization and/or inaccurate information regarding the funding account of the user. This also covers instances of “Disputes” or “Chargeback” filed by the user. A transaction is “Returned” only after it has completed Processing. All returned transactions are placed in RETURNED status in the system.

A return may be initiated either by the user or the bank through which the transaction was debited. The timeframe for initiation of a return ranges between two (2) business days to one hundred eighty days (180) days from the date of initiation of transaction depending upon the reason for which the return is being initiated. The reason for any return shall be accessible to SMP from the dashboard.

ACH Return Codes

While returns in debit cards are basically in the form of “disputes” or “chargebacks”, ACH transactions can be returned for a number of reasons. There are over eighty (80) ACH return codes, however, the most common ones are as follows:

ACH Return Code R01 - Insufficient funds

Transactions may be returned with reason “Insufficient Funds” when the user does not have sufficient balance in their bank account.

Although the system verifies the balance in the bank account at the time of initiation of a transaction, there may be instances where the user has withdrawn funds when the transaction is processing, thus triggering an insufficient balance.

ACH Return Code R02 - Bank Account closed

A transaction may be returned with Code R02 if the bank account used was a previously active account but has been closed by action of the user or the RDFI.

ACH Return Code R03 - No bank account/Unable to locate account

Transactions may be returned with this reason when the user’s bank account cannot be located by the depositing party or the bank of the user. This generally occurs when the system is unable to receive correct information regarding the user’s bank account.

ACH Return Code R04 - Invalid bank account number

Transactions may be returned if the user bank account number is not valid. The entry may fail the check digit validation or may contain an incorrect number of digits.

It happens when the user who previously authorized a transaction has revoked authorization with the originator for this transaction.

ACH Return Code R08 - Payment stopped

A transaction may be returned with this reason if the user has placed a stop payment order on the transaction, which may be placed on one or more transaction.

ACH Return Code R10 - Customer advises not authorized

In this case, the owner of the bank account advises that the initiator of the transaction is not authorized and thus, bank cannot debit the account for the transaction.

ACH Return Code R20 - Nonpayment bank account

A transaction will get a return with this reason if the bank account used was a non-transaction account. Non-transaction account is an account against which transactions are prohibited or limited.

Debit Card Chargebacks

Upon the request of the user, the issuer of the user formally opens a chargeback dispute with Inyo. In such cases, the user’s payment is immediately reversed and the funds are deducted from our account. You may obtain the reason for a dispute by contacting Inyo support.

Chargeback Dispute Process

The SMP may dispute a chargeback filed by a user within fifteen (15) calendar days from the date of the return/chargeback. These are generally transactions returned with the following return codes:

· R07: Authorization revoked by Customer

· R08: Payment Stopped

· R10: Customer advises not authorized.

The process for disputing a return/chargeback shall be as follows:

Step 1: The SMP shall file a Letter of Dispute (LOD) with Inyo as per the format specified by MACHNET from time to time specifying the details of the transaction and reasons for disputing the transaction.

Step 2: Inyo shall accept the LOD and further investigate on the LOD in consultation with the FI Partners and its banking service providers regarding the validity of the LOD. MACHNET shall have the ultimate authority to decide whether an LOD should be accepted or declined and whether the LOD is fit to pursued in order to recoup the funds from the user.

Step 3: Once the LOD is accepted, Inyo shall request the SMP to provide evidences as necessary for the process of representment.

The chargeback shall be settled in accordance with the results of the representment process. Neither Inyo nor its FI Partners guarantee that the funds shall be recouped at the end of the representment process.