Chargeback Policy

• 2.1. To establish an efficient, transparent, and structured mechanism for addressing disputes raised by customers in relation to failed, fraudulent, unauthorized, or unsatisfactory transactions processed through Sec2Pay’s technology platforms, ensuring timely communication and coordination among all relevant stakeholders, including cardholders, merchants, issuing banks, acquiring banks, and Sec2Pay.
• 2.2. To clearly delineate and allocate roles, responsibilities, and liabilities among merchants, partners, cardholders, and banking entities, based on the nature of the dispute and the outcome of the evidence review process, so that financial liability is borne by the responsible party in accordance with applicable card network rules and contractual arrangements.
• 2.3. To safeguard the integrity, reliability, and reputation of Sec2Pay’s platforms and services by discouraging misuse, negligence, and fraudulent practices through risk-based controls, monitoring mechanisms, and proportionate enforcement measures (including settlement adjustments, account restrictions, penalties, or suspension/termination of services), as permitted under applicable law, regulatory guidelines, and Sec2Pay’s contractual and banking arrangements, in line with RBI advisories requiring proactive monitoring of merchant behaviour (RBI Circular DPSS.CO.PD.No.1810/02.14.003/2020-21).
• 2.4. To promote fair trade practices and responsible merchant conduct by encouraging high standards of service quality, transparent customer communication, and timely fulfilment of contractual obligations, with the objective of minimizing customer dissatisfaction, disputes, and chargeback occurrences.
• 2.5. To deploy system-driven risk monitoring indicators, including Chargeback-to-Sale (CTS) and Fraud-to-Sale (FTS) ratios, as early-warning tools to identify emerging risk patterns and enable preventive or corrective actions such as enhanced monitoring, merchant reviews, temporary restrictions, or onboarding controls, in accordance with Sec2Pay’s internal risk management frameworks.

• 3.1. All merchants, institutional partners, and entities that access or use Sec2Pay India E-Services Pvt. Ltd.’s APIs, platforms, plug-ins, dashboards, or other technology interfaces for the purpose of enabling, facilitating, or processing payment transactions or related financial services.
• 3.2. All payment and service transactions initiated or processed using cards, wallets, UPI, or other permitted digital payment instruments, to the extent such transactions are routed, facilitated, or enabled through Sec2Pay’s technology infrastructure, and subject to the applicable arrangements with acquiring banks, sponsor banks, payment gateways, and card networks.
• 3.3. All chargeback-related communications, dispute handling, and resolution processes involving cardholders, merchants, issuing banks, acquiring banks, payment gateways, card networks, and Sec2Pay, where Sec2Pay’s systems or platforms are used as part of the transaction flow or dispute management process.

• 4.1 The process begins when a cardholder identifies an issue with a transaction and approaches their issuing bank to raise a formal dispute. Common reasons include:
  • a. Unauthorized or fraudulent transaction.
  • b. Non-receipt of goods or services.
  • c. Damaged or defective goods.
  • d. Duplicate transaction or billing error.
  • e. Misrepresentation of product or service.

  (Refer Annexure B for the detailed list of chargeback reason codes.)

  The issuing bank registers the complaint and may, at its discretion, provide a provisional credit to the cardholder during the investigation period.

  (As per Visa Core Rules Section 11.4.1.5, provisional credit is discretionary and subject to issuer assessment.)

• 4.2 Step 2: Issuing Bank Investigation
  • 4.2.1 The issuing bank evaluates the dispute based on the cardholder’s explanation and supporting documentation. If the dispute is found to be valid under applicable card network rules, the issuing bank initiates a chargeback and transmits the same through the respective card network’s dispute resolution system to the acquiring bank.
  • 4.2.2 Upon initiation of the chargeback, the disputed amount may be provisionally debited by the acquiring bank and, where contractually and operationally permitted, reflected downstream through settlement or payout mechanisms made available to Sec2Pay and the concerned merchant. The merchant shall submit all relevant supporting documentation in the format prescribed under Annexure A.
• 4.3 Step 3: Acquirer and Merchant Notification
  Upon receipt of a chargeback notification from the acquiring bank, sponsor bank, or payment processor, Sec2Pay shall notify the concerned merchant or service provider through registered email communication and/or dashboard notification. Such notice shall include:
  • a. Transaction reference ID and amount
  • b. Applicable card network reason code
  • c. Supporting documentation received (if any)
  • d. Prescribed response deadline (typically 3–5 business days)
• 4.4 Merchant Response:
  The merchant has the opportunity to accept or contest the chargeback:
  • 4.4.1 If Accepted: The merchant may acknowledge the claim (e.g., in case of non-delivery, confirmed fraud, or unfulfilled services). If the chargeback is closed in favour of the customer, it is considered final. The corresponding amount shall be permanently debited from the merchant’s settlement account and, where applicable, adjusted from the merchant’s subsequent payout cycle.
  • 4.4.2 If Contested (Representment): The merchant may:
    • a. Transaction reference ID and amount
    • b. Applicable card network reason code
    Sec2Pay forwards this evidence to the acquiring bank, which passes it to the issuing bank for reassessment.
• 4.5 Step 5: Decision and Resolution
  The issuing bank reviews the merchant’s evidence and makes a decision within 60–75 days:
  • a. If the evidence is sufficient, the chargeback is reversed, and the funds are restored to the merchant.
  • b. If the evidence is insufficient or missing, the chargeback stands and the merchant bears the loss.
  • c. Sec2Pay updates the merchant via notification or dashboard alert on the final outcome.

  Issuers must respond to the representment within timelines set by the card network; otherwise, the decision may default in merchant’s favour (Visa/Mastercard Dispute Guide 2023)

• 4.6 Step 6: Pre-Arbitration or Arbitration (Escalation)
  If the issuing bank rejects the merchant’s representment, and the merchant disagrees with the outcome, the acquiring bank is not obligated to raise pre- arbitration or arbitration on behalf of the merchant or payment gateway. However, if the merchant holds valid proof of service delivery, they must pursue legal action directly against the customer. This may include filing an FIR with the local police for fraud or misrepresentation and seeking recovery through appropriate civil or criminal proceedings.
  Note: Sec2Pay shall not be responsible for legal representation but may provide documentation support upon request.
  • a. Pre-Arbitration: The issuing bank shall review the documents submitted during representment and share the case status typically marked as “Denied”, along with the evidence, with the cardholder. If the cardholder is not satisfied with the information shared by the merchant through the issuing bank, he/she may request the issuing bank to initiate a pre-arbitration process for further clarification, in accordance with the card network’s dispute resolution mechanism.
  • b. Arbitration: The card network makes a final, binding decision and may levy fees (arbitration costs are usually passed to the losing party).

  Issuers must respond to the representment within timelines set by the card network; otherwise, the decision may default in merchant’s favour (Visa/Mastercard Dispute Guide 2023)

• 4.7 Step 7: Post-Resolution Closure
  Once the case is resolved, Sec2Pay updates its internal records and, where required:
  • a. Releases or adjusts any security deposit or settlement hold (if applicable)
  • b. Revises the merchant’s CTS/FTS ratios (as per Annexure C)
  • c. Notifies the merchant of any penalties or policy violations Persistent violations may result in enhanced monitoring, onboarding restrictions, or account termination.

  Issuers must respond to the representment within timelines set by the card network; otherwise, the decision may default in merchant’s favour (Visa/Mastercard Dispute Guide 2023)

• 4.8 Important Notes:
  • 4.8.1 A refund cannot be issued while a chargeback is active. The cardholder must withdraw the dispute before any voluntary refund is processed.
  • 4.8.2 Chargeback amount is limited to the original transaction value; interest, penalty, or external damages cannot be claimed by cardholders.
  • 4.8.3 Security deposits held for high CTS/FTS merchants will remain on hold for 180 days or until all chargeback and fraud cases are closed by the Risk Department.

*Note: Non-adherence to these timelines may result in automatic acceptance of the chargeback or imposition of penalties.

Chargeback response windows are defined under card network rules and must be met to retain representment rights (Visa Rules 11.2.3 / Mastercard Dispute Resolution Rule 3.6)

CTS = Chargebacks / Total Transactions *100

FTS = Fraud Claims / Total Transactions * 100

These controls are enforced in real time or upon periodic review and are subject to escalation without prior notice.

These thresholds are defined under Sec2Pay's internal SOP and are stricter than Visa/MC monitoring thresholds (0.9%–1.5%) for proactive risk control.

• 7.1 Security Deposit: Merchants exceeding risk thresholds (CTS > 0.20%, FTS > 0.20%) may be required to maintain a non-interest-bearing security deposit of up to 10% of gross transaction value. This deposit shall be retained for a minimum of 180 days post last transaction or dispute closure.
• 7.2 Settlement Hold: Temporary hold may be placed on merchant payouts during periods of increased dispute activity, pending risk verification.
• 7.3 Merchant Hold / Account Freeze: Sec2Pay reserves the right to suspend transaction processing or onboarding of new users if systemic risk is detected.

• 8.1 Fixed fee per chargeback raised, recoverable from the merchant’s next settlement cycle.
• 8.2 ₹100/day shall be charged per transaction where services are not rendered within T+5 days and the same results in a chargeback.
• 8.3 Failure to furnish evidence within the stipulated response period may result in loss of contest rights, recovery hold, or additional fee.

• 9.1 Refunds cannot be issued after a chargeback is initiated. The cardholder must first formally cancel the chargeback with their issuing bank.
• 9.2 If a refund is appropriate, it must be processed only after the dispute is withdrawn, and only for the outstanding unpaid amount.
• 9.3 Refunds issued while a chargeback is active will not reverse or cancel the chargeback liability. If Sec2Pay has accepted the chargeback and the merchant mistakenly processes a refund for the same transaction, the customer may receive funds twice. In such cases, the duplicate payout cannot be reversed under any circumstances, and the financial loss shall be borne by the merchant.

• 11.1 This policy aligns with guidelines issued by the Reserve Bank of India (RBI), and global card networks.
• 11.2 All records relating to disputed transactions must be retained for a minimum of 6 years.
• 11.3 Sec2Pay reserves the right to cooperate with banks, regulators, and law enforcement in dispute-related matters.

1. i.   Regulatory changes
2. ii.  Card network updates
3. iii. Internal audit findings
4. iv. Merchant behaviour and trends

All updates shall be communicated via official notices and are deemed binding upon publication.