EBA Q&A 2023_6788 — Q&A — Fraud reporting [Final Q&A]

Fraud reporting

Question

How we should treat the transactions that are initiated by PSP (for example refunds, chargebacks, etc.), but those transactions are related to cardholder's actions.

Background

As per guidelines 3.1/7.11 transactions should be reported by initiator to avoid doubling of transactions reported by several entities.

We have doubts if direct transfers like MoneySend, refund, reversal, chargeback and 2nd presentment the Issuer isn’t an initiator of these transactions, hence we are looking for legitimate confirmation.

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Answer

In accordance with Guidelines 2.11, 7.11 and 7.12 of the EBA Guidelines on fraud reporting under PSD2 (EBA/GL/2018/05) as amended by the EBA Guidelines EBA/GL/2020/01, payment transactions and fraudulent payment transactions where a payment card was used should be reported both by the payer’s payment service provider (PSP) (the issuer), and by the payee’s PSP acquiring the payment transaction (the acquirer), as follows:

from the issuer’s perspective, under the Data Breakdown C in Annex 2 of the Guidelines; and

from the acquirer’s perspective, under the Data Breakdown D in Annex 2 of the Guidelines.

As clarified in Q&A 4855, a refund initiated by a merchant, which in this case acts in its capacity as a payer, is an electronic payment transaction initiated by the payer. Accordingly, refunds initiated by a merchant using a payment card and refunds as a chargeback to the issuer should be reported in accordance with Guidelines 2.11, 7.11 and 7.12.

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Source: EBA original document