The battle of NFS Disputes - UDM as your ally

Backspace Tech
5 min readNov 3, 2023
ATM Disputes

Just like card networks, the all-seeing eye of the Indian ATM world is the National Financial Switch (NFS). A couple of weeks ago, we uncovered the very existence and essence of NFS, its functions, and how it has made ATM operations seamless across the country.

And this week, we are about to embark on the journey, of how ATM disputes are handled because where there are payments, there exist disputes.

Let’s dive in!

Before we get into the specifics of how an ATM dispute is handled, let’s know who’s who and the associated jargon of the ATM ecosystem;

  • Customer- Well, that’s you
  • Issuer- The one who issues you a debit/credit card
  • Issuer ATM- The ATM owned by your issuer
  • Acquirer- Popularly known as the merchant’s banker, in case of ATM transactions, they are the third-party ATM who is not your card issuer
  • Acquirer ATM- The third-party ATM you use instead of your issuing bank ATM
  • ATM Vendor- They are private corporations whose primary functions are to manufacture and maintain ATM machines and their logs. These corporations might also provide the services of ATM cash deposit or transit, but it differs from vendor to vendor.
  • ATM ID/Terminal ID- The string of numbers that is mentioned on the ATM machine, it basically serves as an identifier.
  • Switch- They function as connectors between the NFS and its member banks. Primarily they act as a message carrier between these two entities. A switch will be used by both issuers and acquirers to connect to the NFS network.
  • Electronic Journal (EJ)- This log is maintained by vendors and has a record of every customer interaction with the ATM concerned.

Now, onto the popular dispute type:

Imagine a scenario, where you are at a random ATM and you go through the standard procedure of withdrawing the money, but here’s the twist. No cash was dispensed, but you get a message that your account has been debited.

Once the initial shock wears off, you immediately get on your bank’s customer care helpline and raise a dispute, and here’s what follows

  • Once your dispute is lodged, your banker, also known as the issuer, will forward the details like
  1. Whose ATM, is it?
  2. The location of the ATM
  3. The transaction amount
  4. Time of the transaction
  5. ATM ID and many other details to NFS via its designated switch provider
  • NFS will then route the details to the bank whose ATM you used, also known as the acquirer ATM these details and ask for a response (reject/accept)
  • Now the onus is on the acquirer to investigate what exactly happened in the ATM.
  • Furthermore, the acquirer will also have the details of the ATM activity and details like Terminal ID, location
  • The acquirer will then ask their vendor to send over the Electronic Journal of the ATM used based on its ID.
  • Once the EJ is received, the acquirer’s technical team will assess the details, and here’s how the dispute will be assessed
  • The dispute is that the cash was not dispensed by the ATM, so the acquirer’s technical team will do the following:
  • Based on the time of the disputed transaction, the team will check the ATM machine balance pre and post-occurrence of the said transaction.
  • Pre-check will help the team ascertain the volume of cash available before the occurrence of disputed transaction withdrawal.
  • Post-check will help the team know if the exact amount of cash was the same as the pre-check and if there are other transactions facing the same issue or if cash was dispensed.
  • In case the investigation turns out to be against the disputed transaction, the same will be conveyed to NFS who in turn will pass it on to the issuer with requisite proof of rejection.
  • If all these checks turn out to be in favor of the disputed transaction, the acquirer will accept the dispute and share the required details with NFS via their switch.
  • Then NFS will proceed to deduct the amount due from the acquirer and pass it on to the issuer. This leg happens during the NFS settlement cycle.
  • The issuer will then proceed to credit your account with the debited amount or in case of a wrong complaint, they will issue a communication as to why your disputed transaction claim was declined.

Now that we know what happens behind a disputed transaction, it is still not without its share of ups and downs. Here are some of the challenges faced by both issuers and acquirers when handling NFS disputes

  • Manual filing of disputes takes a long time
  • As the electronic journal contains every single detail of the ATM activity, it is difficult to manually sort the file.
  • Too many fields can lead to human error and delay in dispute resolution which in turn ultimately leads to angry customers.
  • It requires huge operation teams where there are disconnected teams for EJ collection, analysis, and maintenance.
  • These teams in turn lead to huge operational costs that have to be incurred by both issuers and acquirers.

How can this be resolved?

Well, Unified Dispute Management (UDM) can handle your NFS disputes effortlessly.

For issuer:

Manual procedures are eliminated, as UDM will automatically gather NFS disputes through various customer channels and will file with the NFS system for further action. UDM will also keep your customers apprised of the dispute status to keep them informed.

For Acquirer:

UDM can gather the necessary details from the acquirer’s electronic journal to assess whether the disputed transaction claim holds merit or not in an automated manner. UDM will file the response for the claim in the NFS portal with the relevant proof and details within the prescribed timelines. With UDM in place, the need for huge operations teams is drastically reduced thereby saving costs and optimizing people’s efforts.

UDM streamlines the complete NFS dispute process in a digitized manner with the help of AI and has many more capabilities and features that can digitize your chargeback process.

Get in touch with us today to know more about UDM and how it can help you regulate, tailor, and modernize your NFS dispute process and responses.

P.S: What topic do you think we should explore next? Let us know in the comments.



Backspace Tech

Backspace Tech offers Fintech-as-a-Service to automate,simplify, and disrupt the payment industry by handling chargeback requests through a plug-and-play model.