Frequently Asked Questions - Banking
A key role of the MFSA is that of responding to consumer queries on a wide range of issues relating to financial services. This section gives you easy access to commonly-asked questions about banking aspects.
Question: I have funds in a bank in Malta are denominated in euro. A relative of mine, who for many years resided in Australia, has an account denominated in Australian dollar with the same bank. If our bank fails, are we both covered by the same depositor compensation scheme?
The Depositor Compensation Scheme is a rescue fund for depositors of failed banks which are licensed by the MFSA. The Scheme, which has been in force since 2003, can only pay compensation if a bank is unable to meet its obligations towards depositors or has otherwise suspended payment.
The Scheme is managed by a committee appointed by the MFSA and is made up of persons representing the MFSA, the Central Bank, licensed investment firms, the banks and consumers.
The regulations (Legal Notice 369 of 2003) which transpose the EU Directive on Depositor Guarantee Schemes obliges the committee to compensate depositors following a process of due diligence which should not take longer than three months (which may be extended to another six months by the competent authority).
All depositors of Maltese banks are covered up to EUR100,000 (per depositor, per bank) and depositors will no longer have to bear the initial 10% of their losses.
Most types of deposit are covered, including current, deposit and savings accounts. Similarly, most depositors are covered by the Scheme. There are however some depositors who might not be able to claim. Companies which are permitted to draw up abridged balance sheets in terms of the Companies Act are also covered by the Scheme.
Joint accounts are divided equally between account holders where there is no indication of the share of each holder in the account. Each will be covered up to the limits prescribed in the Regulations, subject to eligibility. In respect of deposits held by a person acting as trustee or nominee for one or more beneficial owners, the deposit making up the claim shall be deemed to belong to such beneficial owners equally unless there exists specific information which may otherwise determine the beneficial interests of such persons.
A depositor can only submit one claim for all his deposits taken in aggregate against a failed licensed bank, including the depositor’s share in a joint account or a client account, less any amounts due to the bank (such as loans).
The Scheme covers deposits denominated in euro and deposits in the currencies of EEA countries whose currency is not the euro. This means that deposits in Australian dollar are not covered by the scheme.
In the unlikely event of a bank failure and the Scheme needs to compensate depositors, the payout period is 20 working days that are reckoned from the date when the competent authorities determine that a credit institution is unable to repay its deposit liabilities – with a possible extension of 10 working days in exceptional circumstances.
Credit Institutions are also required to be more transparent with regard to the information that they are obliged to provide to current or prospective depositors in connection with the scheme. The information on the scheme contained in advertising by participants will be subject to certain restrictions in order to prevent adverse repercussions on the stability of the banking system or on depositor confidence.
More information about the Scheme is available from www.compensationschemes.org.mt.
Question: I have been noticing multiple adverts on newspapers and TV advertising very good rates for fixed deposit account by banks which I had never been aware of. All these adverts claim that my deposit is protected under the Depositor Compensation Scheme but I want to make sure that none of these adverts is misleading – such as for example, enticing me to deposit my hard-earned savings with them on the basis that my deposit is covered by the scheme, when in actual fact it is not.
All banks licensed by the MFSA are required to be members of the Depositor Compensation Scheme. The Scheme provides a level of coverage of up to €100,000 for each depositor in the event that a bank becomes insolvent and therefore is unable to honour its obligations towards such depositors.
In light of the new regulations which came into force in August 2009, all banks are required to indicate clearly that they are members of the Depositor Compensation Scheme in Malta. Very shortly, all banks will also be providing information to their depositors (on demand or through their websites) relating to the scheme including the circumstances under which the scheme would pay compensation. This information is already available on the Depositor Compensation Scheme’s website (www.compensationschemes.org.mt) but banks are now also required to provide this information to depositors to enable them to understand better how the scheme works and whether and to what extent their deposits are covered.
In brief, the scheme covers deposits made by individuals and small companies which are allowed to draw up abridged balance sheets in terms of the Companies Act. The scheme covers deposits in the currencies of all EU and EEA (European Economic Area). Other non – EU currencies are excluded. There is no closing date as to the limit of €100,000 (as many depositors continue to think). The limit is per person, per bank so for example, if two banks are unable to honour their obligations at the same time, a depositor is covered for up to that limit for each insolvent bank.
As with diversification, there is absolutely no harm for a depositor to diversify and distribute his/her savings between different banks.
More information on the Depositor Compensation Scheme is available here.
How does it work?
- This product offers pensioners the possibility to translate part of the value of their property into a liquid asset.
- By entering into this contract, the pensioner will have more cash in hand whilst enjoying their retirement in their own home.
- Individuals who subscribe to this scheme will be essentially taking out a loan in exchange for regular income. The loan will be repaid when the property is sold.
Who is offering it and when?
- This product can be offered by licensed credit and financial institutions operating in or from Malta.
- MFSA is currently working on the regulatory framework that needs to be in place for it to regulate the equity release financial product.
- The equity release financial products regulations [Regulations’] will come into force on the 1st of September 2019. After this date no credit or financial institutions can offer such product without being duly authorised.
- Any licensed institutions providing such financial products will have one year to comply with the requirements set out in the Regulations published by the Authority.
- MFSA encourages interested individuals to seek independent professional advice and weigh their options before entering into an equity release transaction for the first time.
- It is your right to receive all the information you need to make an informed decision.
- MFSA will issue further updates once the framework comes into force. The public is encouraged to follow the Authority’s channels on Linkedin, Twitter and Facebook, or alternatively visit www.mfsa.mt for the latest updates.
Question: I would like to bring to your attention a problem many parents may be encountering. Once our children are 16 years of age they are told that they can have their own accounts. Knowing my children well, I went over to the bank to request information about my son’s account because I wanted to be certain that he is depositing his pocket-money. However, I was told that I could not be given such access as the account belongs to my son. I informed them that I was the parent and that legally he is still under-age and that my husband and I are still legally responsible for him. However the reply was that this was the practice in banking services and that the parents are consulted only if a request for a loan is made. I find this to be very wrong. At that young age many of them are still irresponsible and still need some guidance from the parents.
Article 188 of the Maltese Civil Code (Of Majority, Interdiction And Incapacitation) states that ‘Majority is fixed at the completion of the eighteenth year of age’. On the other hand, Article 971A of the Civil Code providing with the ability of children over sixteen years to open and operate bank account provides that ‘Notwithstanding any provision of this Code, a child who has attained the age of sixteen years may deposit money in an account opened by the child in his or her own name with any bank, and any money deposited in any such account may only be withdrawn by such child notwithstanding that such money may be subject to the administration, usufruct or authority of any other person. For all purposes of law the child shall with regard to the opening and operation of any such account be considered a major.’
In this respect, paternal authority ceases as soon as a child opens a bank account in his/her name.
Facilities may only be granted to a minor who has attained the age of sixteen years and such minor shall be deemed to be major with regard to obligations contracted by him/her for purposes of trade, if (i) he/she has previously been authorized to that effect by the parent to whose authority he/she is subject, by means of a public deed registered in the Civil Court or, where both parents are dead, interdicted or absent, he has been authorized by the judge of the Civil Court and (ii) a summary of the deed of authorization or of the decree aforementioned has been published by means of a notice in the Government Gazette and in another newspaper.
In this regard, minors who are traders authorized as aforesaid can by reason of their trade charge, hypotheca for personal purposes (home loan).
For instance, banks would not issue a credit card to young adults under 18 years of age. They may only do so if the primary cardholder is either the parent or legal guardian – in that case, the supplementary cardholder may be the young adult. Any debts incurred by suchte and even alienate their property, without any of the formalities prescribed by the civil law. It is important to note that in these instances facilities may only be provided to minors in relation to their trade (business loan) and not supplementary cardholder would be under the responsibility of the primary cardholder.
Question: Last year I took out a home loan with one of the local banks. Recently, I approached another bank which offered me a better package for my current home loan. I decided to take up the offer of this bank but when I went to my other bank, besides the multiple efforts to convince me not to extinguish the loan, I was charged a hefty fine for closing the account ‘prematurely’. Can the bank do so?
Question: In 2011, I took out a loan with one of the local banks. Recently, I popped in another bank and was offered a very good rate for my current balance with the other bank. I decided to take up their offer and went to close my loan account with the other bank. When I informed my present bank that I would be refinancing my loan, the bank slapped a charge of €800 – had I closed my loan account from proceeds not coming from another bank (such as from inheritance), they would have charged me €100 only. I think this is grossly unfair and uncompetitive.
With regards to the first question, there is really nothing one can do because a bank may impose an early repayment charge if a loan is paid in full or in part before the time established by the agreement. The actual charge and the period until when it is applicable would be clearly indicated on the sanction letter or any other credit agreement.
The Home Loan Regulations (Legal Notice 415 of 2011) establish the bank’s obligation to provide the consumer with pre-contractual information that includes a list of related costs, such as administrative costs, insurance costs, legal costs, the costs of intermediaries and the conditions applicable (if any) in case of early repayment.
These Regulations also provide that in any home loan agreement, the bank is obliged to ensure that the agreement includes the consumer’s right to a reduction if he/she pays credit before it is due.
Nevertheless, the Regulations state that if costs directly arising from the credit agreement have been specified in the agreement and such costs are fair and reasonable, taking into account all relevant circumstances, the bank shall be entitled to a fair and objectively justified compensation for possible costs directly linked to early repayment of the loan so long as such early repayment falls within a period for which the borrowing rate is fixed.
The Regulations also allow for consideration to be given to the impact of early repayment on administrative costs irrespective of whether the borrowing rate is fixed or variable.
Even if a sanction letter gives a legal right to a bank to apply the charge, a bank might be able to reconsider its decision (effectively waiving its right to charge). Some banks for instance, do not apply an early repayment charge at all.
In regard to the second question, home loans issued prior to 1 January 2012 remain regulated by the Consumer Credit Regulations (Legal Notice 84 of 2005, as amended in 2007 and 2010). These Regulations do not specifically preclude a bank from applying a different structure of charges in the case of early repayment but it does require that such costs are fair and reasonable.
It is very questionable – perhaps also anti-competitive – if a bank charges a different fee purely on the basis of the way the loan account has been closed before maturity date. If this charge did not form part of the list of charges when the sanction letter was drawn up, the matter may be in breach of the contractual agreement apart from being in breach of consumer protection legislation. If the charge is an item on the list of charges on a sanction letter and the consumer accepted it, it remains to be seen whether that too may be in breach of consumer and competition legislation as it is unlikely that a bank incurs differentiated charges depending on the way the customer closes his loan account.
The Home Loan Regulations (Legal Notice 415 of 2011) in force since 1 January 2012 do not allow a bank to charge different early repayment fees depending on the manner the loan has been closed. Indeed, a bank is required to apply the same early repayment tariff to all its customers, irrespective of the reason given by the client for such early termination.
Question: Some years ago, I had purchased funds from a local financial entity. I agreed with its representative that payment of any interest distributed by the fund is paid by cheque. A week or so ago, I received a letter from my financial entity requiring me to have interest credited in my account at €1.50 for each transaction. This is unfair because, in the past, I was never charged for receiving my dividends. I would like to continue receiving payment by cheque but if I do so, the financial entity will charge me €10 and will aggregate the amount of interest annually (rather than quarterly). I firmly believe that this is rather unfair as I have never authorised the financial entity to arbitrarily change its fees. Can I contest the financial entity’s decision?
Question: For these last few years, I have used my bank’s internet banking service gratuitously. Recently I was informed that the bank will start imposing a tariff for the service. This leaves me with no option but to either accept the charge or alternatively stop using the service and move my accounts with another bank (which may not be a practical solution). Can a bank introduce or change a fee while it is providing such service?
There are two issues which underpin questions of this type. The quantum of the charge and the contractual obligation attached to the entity’s decision.
Any financial entity may introduce or vary its charges as long as it is contractually allowed to do so. Whenever a consumer accepts to avail himself/herself of an entity’s service, there is usually a specific clause which states that the customer agrees to pay those fees and charges which the company may establish from time to time. This is subject to prior notification of such changes to the customer, usually, (but not exclusively) within 30 days of the changes coming into force. In most of the cases considered by the Unit, this clause featured under the terms and conditions of service. Furthermore, the financial entity would have provided the Unit with a specimen copy of the terms which the consumer was likely to have been required to sign before the taking up of the service or product. Alternatively, the financial entity would have provided a copy of the actual terms signed by the customer.
With such general clauses, the entity would cover its legal and contractual responsibility towards its customer should there be any changes to its fee structure. This means that a financial entity may exercise its right to amend its fee structure because the customer had originally agreed to it.
Whether the application or increase of a charge is ethically incorrect is another subject altogether. There might be sufficient and commercially justified reasons for varying a fee structure. In the first question, for example, it is clear that the company preferred to use electronic payments to distribute interest to its investors. Such a practice is quite normal and is promoted because cheques are considered to be an inefficient way of payment. The processing of a cheque is laborious and does not give value to the customer upon presentation. Electronic direct-to-account payments are increasingly becoming a preferred means of payment and provide the consumer with value as soon as the funds are credited. Therefore, it is normal for financial entities to apply a high charge to process payments by cheque - at least to provide an incentive to the customer to switch. After all, even the Treasury and many other government departments are doing away with cheques to resort to electronic direct-to-account payments. Customers may have to learn to ride along with the system and adapt themselves subject to proper and intensive educational initiatives.
With regards to the second question, one may argue that while there might be serious commercial justifications to apply a tariff for the use of such electronic banking facilities, it is evident that consumers – who may have been lured to take up the service because it had been offered for free or at very low cost – received a cold shower when a charge became applicable unexpectedly. Attracting a captive mass of customers on the pretext of a free service and then rolling out a charge on a take-it-or-leave it basis may not be in breach of any contract but may surely be interpreted as being unfair.
Question: I have a problem with my bank regarding the time it has taken to clear a foreign cheque. I presented a cheque drawn from my bank account in the UK to my bank in Malta. There are sufficient funds in my UK bank account. However, the local bank confirmed that although funds would appear in my account in Malta, I would be unable to release my funds within the next 4 weeks. Let’s face it, the bank should be able to check that there are sufficient funds in my account as all transactions are electronic these days. Having pressed them in my emails to explain why they find it necessary to take 4 weeks to clear an EU Cheque compared to a few days in other EU Countries, my questions remain unanswered. Is that right?
A bank which receives a cheque drawn on any other bank located in another country has to incur a number of administrative processes before it is cleared. Indeed, that cheque has to be physically sent to a clearing bank abroad, which in turn would need to carry out its own processes to ensure that the person who issued the cheque is in funds (and that the cheque is not fraudulent, for example).
If you access the section Compare Charges & More on our website, you will note that the bank may take up to 30 working days for a cheque drawn by an EU bank to be cleared. One would say that the period is relatively long. However, one has to appreciate that the bank has to be fully satisfied that, prior to releasing any funds, the drawer is in funds. In the meantime, however, your bank has deposited your cheque into your account and you are earning interest on the amount.
In truth, although a cheque may be a convenient way to pay, it is certainly not the most efficient way of payment methods. That is why many attempts are being made (even at EU level) to curb cheque use and promote the use of bank-to-bank transfers which are much more efficient to the extent that funds would be available in your account within five working days, at most.
Question: A small trader in Malta exported a consignment of goods to the EU. The foreign importer asked the local trader to provide him with its bank’s name, address, IBAN and BIC codes to effect payment. However, the local trader objected to this and stated that he would prefer payment by cheque as he felt uncomfortable giving details of his bank account to third parties (even if with good intentions). The local trader was of the view that payment by cheque was more secure, although he admitted that he had never received funds directly into his account. The local trader enquired with the Unit whether he had a right to request payment by cheque rather than a bank transfer.
The consumer should feel safe to provide an account number to the importer for the purpose of receiving funds into his account. One might argue that by providing his account number to a third party, such party might mis-handle the information and instead of crediting the trader’s account with the funds due, that third party might attempt to withdraw funds from the account without his knowledge.
Although this is a valid concern, it is not that easy as one might envisage because withdrawal of funds from an account requires proof of identity, sometimes in person, and other documentation. Although many Member States still use cheques as means of payment (according to statistics, Malta’s use of cheques is quite high in comparison to the EU average), they are considered to be an inefficient way of payment. If the trader resides abroad (even Maltese persons are finding it more convenient to send money via bank transfer rather than using cheques especially through internet banking), it is more convenient to receive funds directly into an account because funds are made available the minute they are credited (usually within 24 hours of funds being sent by the trader).
If the trader sends a bank draft drawn on a foreign bank, that draft (i.e. cheque) would need to be sent abroad for clearing – a process which could take up to 18 days for the funds to become available (it could take even more if the foreign bank is not located in the EU). Although the local importer has vouched for the foreign importer integrity, there have been several occasions where local consumers received payments from abroad by cheques only to find out they were fraudulent during the clearing process. With a bank transfer, such issues would never arise.
The consumer should not hesitate to provide the bank’s name, address, and IBAN CODE to the trader. Some banks do not charge for incoming fund transfers not exceeding EUR10,000 (if the amount is in euro). The customer should ask the trader that charges for the transfer should be on SHARE basis.
It is always advisable for consumers, whether they are sending or receiving bank transfers, to access their bank’s respective website relating to transfers.
Question: I received two cheques from another EU country as wedding gifts. When I went to encash them, the bank informed me of the charges it would apply to encash them. However, when the cheques were finally deposited into my account and was able to withdraw the money, it transpired that the charges were more than originally agreed. The bank insisted that the additional charges had been applied by foreign institutions involved in encashing the cheque payments and over which it had no control. Can the bank simply deduct any additional charges without informing me beforehand?
When a cheque is issued by a foreign bank, it would need to be checked and verified from the issuing bank before the local bank is able to release the funds in your account. This might involve a correspondent bank (this is an intermediary bank, a sort of go-between the local bank and the issuing bank) to which the cheques are sent. Each bank has its own charges and fees which would be charged to the local bank which originates the request for the cheque to be cleared. Some banks charge a flat rate, others charge a variable rate (a percentage on the amount), others a mix of the two. There might also be currency exchange fees if the cheque/s are denominated in a foreign currency – however, exchange fees would normally be applied by the local bank.
Your bank might not be in a position to be aware of the charges which could be levied by the foreign banks. It would however be obliged to inform you that additional charges may apply – but not the exact amount. You also need to be informed that the bank will be deducting any additional charges over and above its own charges which have to be clearly stated when the transaction is entered into.
Do you know how much you pay for enchashing a bank cheque or draft? How much does your bank charge you for sending or receiving funds into and from your account?Click here to compare fees and charges for bank services.
Question: Why does my bank in Malta apply a charge for sending payments in euro to other banks in the EU? Isn’t there supposed to be an EU rule which stipulated that all EU transfers should be free?
There is no rule in the EU which states that cross-border transfers should be free. EU rules, however, state that a bank in the EU cannot discriminate in its charging structure between a national payment (ie to another bank within the same country) and a cross-border payment (ie to another bank within the European Economic Area).
Up to 31 December 2007 (when Malta’s currency was the Lira), all local banks had an arrangement whereby transfers in MTL within Malta were either free or at a very low cost. As of 1 January 2008, this arrangement could no longer apply as all transfers in euro became subject to the rules of a regulation (EC Regulation 2560/2001) on cross border transfers in euro.
In effect, the regulation had been in force throughout the EU since 2001 and has been applied by local banks for all transfers in euro, whether to banks in Malta or to any other bank in the EU irrespective of the way the transfer was requested of the bank (i.e. whether via the branch network or internet banking, where available).
A month after Malta joined the euro, all banks in the EU (including Maltese banks) started to process bank payment in euro under a new ‘payment regime’ called the SEPA Credit Transfers. SEPA involves the creation of a zone for the euro in which all electronic payments are considered domestic, and where a difference between national and intra-European cross border payments does not exist.
At the same time, local banks took the opportunity to revise their charging structures for bank transfers (especially, but not exclusively) in euro. What the local banks did was distinguish between charges depending on the way the request for the transfer originates. Indeed, as the respective bank tariffs indicate, a customer sending a payment via a bank’s internet banking system (where available) is charged less compared to ordering the same payment at the branch. Strictly speaking, the payment is processed through the same systems, but local banks seem to prefer receiving instructions for payments via their internet banking systems rather than through their branch network (where there is an additional cost for a bank clerk to fill out the form etc).
It must be emphasised that the local banks are not distinguishing between an internet transfer from a branch in Hamrun to either another branch of another bank in Gzira or a branch of a bank in Hamburg. The cost is the same. The charge would vary (i.e. higher) if the bank is given instructions for a transfer over the branch counter.
As of 1 November 2009, payments are regulated by an EU Directive – the Payment Services Directive. Your bank is obliged to give you all information you may require to enable you to receive and pay into your payment account. Have you checked your bank’s website or called its call centre to enquire about your rights when paying electronically?
All local banks have made available information about payments and charges on their main websites. Indeed, a consumer rightfully expects to have full access to the bank's full list of tariffs applicable for the service he requires before the transaction. The MFSA has complemented such information with the publication of tariffs for bank-to-bank transfers, including information about the customer’s rights and obligations when making payments, in its comparative tables.
KEEP IN MIND that whilst cheques may be convenient for you to make a payment, the use of cheques are not covered under the Payment Services Directive and you may not enjoy the high level of protection which is afforded to consumers who make or receive payments electronically through their bank. So be informed about your rights. ASK!
Question: I have been using my debit card to withdraw money from ATMs for quite some time. However, recently, I tried to withdraw from an ATM and neither the card was ejected nor cash was dispensed. I contacted the bank immediately and reported this incident. Although the person at customer service did its best to assist by checking the ATM remotely, neither cash nor card was withdrawn. My debit card was stopped and two days after a new card was provided by the bank. However, upon checking my bank statement, it transpired that €100 were debited from my account, which is not true as no cash was dispensed. Although I complained formally to the bank, it refused to refund me the €100 which was not dispensed.
This is not the first time the Unit received complaints about ATMs failing to dispense cash or failing to dispense the full amount requested by the cardholder. As with any complaint received by the Unit, the bank is asked to provide an extract from the machine’s log report together with end-of-day reconciliation. This is a physical reconciliation much like a cashier would do at the end of day, and basically the bank checks that the actual cash agrees with the cash on the audit report. The banks’ ATMs are programmed in such a way that any malfunctions would appear on the same log report at the time of transaction. Moreover, some ATMs are also programmed to indicate not only the amounts but also from which tray cash is dispensed.
In this particular case, the bank provided extracts from the log report of the ATM and it was clear that cash had been dispensed correctly and that, at the end of the day, a full and correct reconciliation was made. The card, for some reason, was not found at the ATM.
Copies of any log reports related to the disputed transactions are given to the complainant.
Question: Does a credit card/international debit card issuer have liability towards the purchaser if any goods purchased from a supplier by the card (without insurance cover being made available by the card provider) are not in conformity with the contract of sale?
There is no clear-cut answer to this question as one needs to distinguish between a purchase effected where a card is present at the time of the transaction (i.e. face-to-face, where the merchant has swiped the card in the presence of the customer) and where a card is not present (i.e a purchase made over the internet or over the telephone, where the card is not swiped and the customer has not physically seen the product he had ordered).
1st Scenario: Card present – in this instance, the issuing bank (i.e. the bank which has issued the card to the cardholder) is not liable towards the cardholder (i.e. its customer) if the product malfunctions or where the customer, after purchasing the product, has a change of heart and wants his money back or wants something else instead. The customer has to take it up with the merchant directly. A prospective purchaser has to carefully check whether he/she is entitled for a refund when returning goods. The goods or services being purchased need to be checked before paying the bill. Check for specific clauses on receipts such as ‘no refunds’ clauses. It is imperative that cardholders always check the entries on their statements for possible processing errors that may have unintentionally occurred at the time of the transaction.
2nd Scenario: Card not present – in this scenario, the cardholder enjoys a range of varying degrees of rights, although each case is assessed on its merits.
Example 1 – The cardholder purchases a product online. The supplier (foreign) processes card details as to payment but the product never reaches the cardholder. The cardholder should communicate this to the supplier. If the supplier does not reverse the transaction or re-sends the same object, the cardholder has a right for a chargeback, i.e. the bank will be required to reverse the transaction. There is a time-limit for the customer to do so, usually 30 days, from the date of the transaction (i.e. if the product does not reach the cardholder within 30 days, he has to apply for a chargeback). Chargeback processes are strictly regulated by VISA/Mastercard in terms of time frames in which cases may be initiated and the time in which a merchant can reply.
Example 2 – the cardholder purchases a product online. The supplier (foreign) processes card details as to payment. The product arrives but is not the product the cardholder had ordered. The cardholder should communicate this to the supplier straight away. If the supplier does not reverse the difference, the cardholder has a right for chargeback.
A chargeback, in simple terms, is a right (not automatic) granted by the card issuer (through the international network to which the card is linked) whenever there is a breach in a contract of sale in particular situations, most of which relate to transactions where a card is not present. The chargeback process would normally involve the issuing bank (the bank which issued the card to the cardholder) contacting the international network, which in turn contacts the bank which acquired the transaction (i.e. the acquirer bank, that bank which processed the card transaction on behalf of the merchant). The merchant may reply, and may also object to the chargeback, in which case, there is some sort of dispute resolution system between the banks. If the merchant does not reply within a certain time frame (usually within 45 days), the chargeback becomes automatic.
Note: Chargeback do not extend to situations where the quality of the service or product is poor or not up to standard. Neither does it extend to situations where the claim for chargeback is not quantifiable. Customers need to check about the costs surrounding the investigative process which can range between €25 to €40 which can subsequently be refunded if the chargeback is successful.
You may also be interested in the following links:
- Using credit and debit cards – your rights explained!
- Chip & PIN
- Know your charges
- Some helpful tips to help you shield your card and money from fraud
Question: I use my credit card quite often, both in local shops and when I shop online. Although cards are promoted as a ‘safe’ way to make a payment, I am quite concerned to read in the press of fraudsters who manage to replicate card details and then sue such cards to make illicit payments and even cash withdrawals. What are my rights as a consumer?
As a cardholder, you have rights but also responsibilities. A cardholder is obliged to take all reasonable steps to keep his card safe and the means (such as a personal identification number or other code) which enable it to be used. A cardholder is also obliged to inform his bank as soon as he/she notices that the card is lost, stolen or of any unauthorised transaction on the card account. Unless the cardholder is not found to have been ‘grossly negligent’ in contravention of aspects of the framework contract (Terms and Conditions binding on the card account) or fraudulently, any losses sustained by the cardholder as a result of theft or loss of the card up to the time of notification to the bank may not exceed €150.
Banks in Malta have been introducing ‘chip and pin’ or EMV compliant cards as part of a European drive for all cards to be ‘SEPA compliant’. Indeed, the SEPA Cards Framework (for both debit and credit) introduces a new standard which allows the cardholder to pay and withdraw cash throughout the SEPA zone. To enable this, all cards and terminals will use a standard technical and operational interface, known as the EMV standard.
All SEPA compliant credit and debit cards will be required to have an embedded chip (to improve security and comply with EMV standards). With a SEPA compliant card, consumers can make payments and cash withdrawals anywhere in the SEPA zone with the same ease as in their home countries. Retailers and service providers will need to ensure their terminals are suitable for EMV.
Consumers should be aware of the terms and conditions applicable to their card and be aware of changes therein from time to time and which must be notified by the card issuer prior to their application. Cardholders should always keep their PIN secret and inform themselves about the use of chip and PIN cards at retailers.