Online Payment with Moneris

Question

I am building a website for a client using PHP and accepting online payments by hooking into the Moneris API. My client keeps asking me this:

"If a payment is accepted, we ship the products and the credit card is then found out to be fraudulent, are we reimbursed by Moneris?"

I know this is not really a development question, but I do not know and I do not want to tell them to just figure it out themselves. I cannot seem to find an answer anywhere.

Basically my question is, do these large online payment processing providers (like Moneris) have insurance to reimburse the merchant on products delivered before the payment is found to be fraudulent?

Answer 1

I've no idea about Moneris, but in general, credit card processors do not return funds to merchants in cases of fraud. The merchant is expected to either eat the costs, or get their own insurance policy.

Answer 2

Depends on how the card details were captured.

If it was over the internet and 3dsecure authentication was used (Verified by Visa / MasterCard SecureCode) then the merchant is not liable for chargebacks (which is the correct term for what you're talking about)

Anything other than that, and yes - the merchant would cover the cost of the chargeback, and if an excessive number of chargebacks occur then its likely the acquirer would close down the merchant account.