Dispute resolution

A customer can dispute an NACH Debit mandate or transaction by reporting the issue to their bank. NPCI has a well established dispute resolution mechanism.

Like cheques, NACH Debit mandates and transactions are irrevocable. Therefore there is no regular refund mechanism as exists with other payment systems such as credit cards.

However, NACH Debit has a well-structured dispute resolution mechanism in place, managed centrally by NPCI.

Customers can report a dispute to their bank (known as the 'destination bank') by the bank's established form or process. The destination bank is obliged to file the dispute with the NACH system, and LotusPay's bank (known as the 'sponsor bank') is obliged to respond within a fixed time-frame.

If LotusPay is processing the payment on behalf of the merchant, the sponsor bank will ask LotusPay to provide the response, and LotusPay will notify the merchant by email of any dispute and any required response.

If LotusPay is not processing the payment (only applicable for some Pro merchants) on behalf of the merchant, the sponsor bank will ask the merchant directly.

If a customer's dispute is successfully upheld, the funds will be returned to the customer.

There are three types of disputes:

1. Initial Dispute

  • Raised by: Dispute Initiating Bank
  • Turnaround time: Initiate within 35 business days from the date of transaction and to close before end of 10 business days from the date of dispute initiation. Closure would happen on acceptance of reasons provided by DRB. In the event of no response from DRB, the dispute would be considered as accepted by DRB

2. Pre-Arbitration

  • Raised by: Dispute Initiating Bank or Dispute Responding Bank
  • Turnaround time: Initiate within 5 business days from the date of closure of dispute initiation and to close before end of 10 business days from the date of prearbitration initiation. Closure would happen on acceptance of reasons provided by DRB. In the event of no response from DRB, the dispute would be considered as accepted by DRB.

3. Arbitration

  • Raised by: Dispute Initiating Bank or Dispute Responding Bank
  • Turnaround time: Initiate within 15 business days from the date of closure of Pre-arbitration. Arbitration process is a manual process and hence outside scope of DMS.

Good faith disputes

Any disputes raised after 35 business days up to 120 business days from the date of transaction will be considered as a good faith dispute. Participant banks are expected to resolve the dispute amicable in the interest of customer with in a period of 10 business days from the date of good faith dispute initiation.