Mizanur Rahman: With the advancements in Fin-Tech, innovative banking services are becoming more accessible to customers. However, with the rise of electronic transactions comes the unfortunate reality of transaction disputes. While disputes occur in less than 1% of all transactions, according to central bank statistics, they can lead to customer dissatisfaction and mistrust, especially when not addressed swiftly.

Types of Transaction Disputes:
A transaction dispute can occur in various forms. For example, when a cardholder uses an ATM to withdraw cash, and the amount is debited from the account, but the cash is not dispensed, this is termed an ATM dispute. Similarly, disputes arise when a customer makes a purchase via a Point of Sale (POS) system or QR code, or transfers funds through internet banking or e-commerce platforms, and the transaction is declined despite the account being debited.

Disputes may occur for several reasons, including power outages, ATM malfunctions, network failures, or human and technical errors. While these issues are rare, they still lead to confusion and frustration for customers, who are often left wondering when their funds will be returned.

Handling Transaction Disputes:
Understandably, customers may panic when a transaction dispute occurs, but banks are keen to reassure their clients that there is no need for concern. Customers should immediately contact their issuing bank with all relevant details of the disputed transaction. However, the key issue is the time it takes to resolve the dispute and refund the money.

Electronic transactions operate on various networks, each governed by its own rules and regulations for dispute resolution. For disputes occurring within a bank’s own network (such as when using the bank's ATMs or POS systems), resolutions typically take one to three days, excluding cash capture disputes that may require more time. On the other hand, disputes involving interbank transactions, such as those through the National Payment Switch Bangladesh (NPSB), follow a more prolonged process.

Regulatory Framework and Challenges:
According to the Dispute Management Rules (DMR) issued by Bangladesh Bank in 2015, a cardholder who faces a dispute through the NPSB network must file a claim within 60 days. The issuing bank then has up to 25 days to review the claim and initiate a chargeback if necessary. The acquiring bank has an additional 30 days to accept the chargeback or initiate a re-presentment, after which the dispute can progress through various stages, including a second chargeback or arbitration. This lengthy process can take several months.

In contrast, transactions involving Visa or MasterCard networks often take even longer to resolve. This delay can be particularly distressing for low-income individuals who rely on their full monthly salaries for essential expenses such as rent, groceries, and medical bills.

Improving the Dispute Resolution Process:
The NPSB network has proven to be a valuable system for resolving interbank transactions quickly. Currently, 90% of transactions in Bangladesh are processed through this network, which has significantly improved the speed of dispute resolutions. However, when customers are informed that their disputes may take up to 30 days to resolve, they often express dissatisfaction with the timeline and request amendments to make the process faster.

In emergency cases, dispute resolution teams often initiate chargebacks using the Dispute Management System (DMS-NPSB) or Q-Cash Dispute Management System (QDMS). Bank officials may even use personal relationships and direct communication with other banks to expedite the process. Despite these efforts, many banks remain reluctant to resolve disputes promptly.

A Call for Policy Reform:
To address these challenges, it is crucial to reconsider existing policies and ensure that customer satisfaction remains at the forefront of the banking industry. Banks must recognize that customers are always right and strive to resolve disputes more efficiently. The central bank’s recent directive to resolve IBFT-NPSB disputes within five days is a step in the right direction, but more can be done.

Remote on-us transactions (such as using another bank’s ATM) should not take an excessive amount of time to resolve compared to on-us transactions. To achieve this, banks need to recruit more dispute resolution experts and ensure that any workforce shortages in this area are addressed promptly.

Transaction disputes are an inevitable part of the digital banking experience. However, with the right policies and resources in place, banks can resolve these disputes swiftly and restore trust with their customers. As we move towards an increasingly cashless society, it is more important than ever for the banking sector to demonstrate its commitment to customer service by improving dispute resolution mechanisms.

Mizanur Rahman, emerging writer & banker
Alternative Delivery Channel, Bank Asia
e-mail: mr.rahman@bankasia-bd.com