Central Bank of Oman

Dispute Management System

(MpClear & ACH)
Version 1.0 – July 2018

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Table of Contents
Table of Contents ..................................................................................................................................................... 2
1 Change Control Table ......................................................................................................................................... 3
2 Key Terms ........................................................................................................................................................... 4
3 Introduction ......................................................................................................................................................... 6
3.1 Introduction ............................................................................................................................................ 7
4 Scope of the DMS ............................................................................................................................................... 8
4.1 Member Banks ....................................................................................................................................... 8
4.2 Central Bank of Oman. .......................................................................................................................... 9
4.3 General Rules in DMS. ........................................................................................................................ 10
5 MpClear Dispute Rules. .................................................................................................................................... 12
5.1 Dispute Cycle ....................................................................................................................................... 12
5.2 Dispute Cycle process constitutes below steps: ................................................................................... 13
5.3 Dispute Turnaround Time (TAT) ........................................................................................................ 14
5.4 Allowed chargeback request & reply reason code ............................................................................... 15
5.5 Accounting Entries............................................................................................................................... 17
5.6 Transaction Liability ............................................................................................................................ 18
6 ACH Dispute Rules........................................................................................................................................... 19
6.1 Dispute Cycle ....................................................................................................................................... 19
6.2 Dispute Cycle process constitutes below steps: ................................................................................... 20
6.3 Dispute Turnaround Time (TAT) ........................................................................................................ 21
6.4 Allowed dispute request & reply reason code...................................................................................... 23
6.5 Accounting Entries............................................................................................................................... 24

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1 Change Control Table

Release Author Date Changes

0.1 CBO - PSD 07th June 2018 Working first draft

0.2 CBO - PSD 11th July 2018 Working second draft (Incorporating banks comments)

1.0 CBO - PSD 19th July 2018 Operating rules released to stakeholders

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2 Key Terms
Key terms used in the guide are defined in the following table.

Term Description

ACH System Automated Clearing House System.

Business Day Official working hours as declared by the Central Bank of Oman in
which all participant banks perform their financial transactions
and the financial transactions are settled in the bank’s settlement
accounts with the CBO.

Mandate Mandate is a legal contract authorized by the debtor allowing a

creditor to debit an amount from the specified debtor’s account
at the debtor’s bank at predefined date fixed in the mandate.

Net Clearing The financial position for each Participant at the closure of each
Position (NCP) clearing session arrived at by offsetting of the mutual obligations
on a multilateral basis to arrive at the net debit or net credit
positions of the participants.

RTGS Real-Time Gross Settlement System.

TAT The duration of time provided to raise/complete a

dispute/dispute action.

Dispute Dispute is a situation in which a customer questions the

correctness of a transaction and or seeks clarity or resolution.

Auto Accepted In the event of a dispute that is un-attended till the expiry of the
TAT period the system automatically closes the dispute and is
deem accepted.

Auto Rejected In the event of a dispute that is un-attended till the expiry of the
TAT period the system automatically closes the dispute and is
deem rejected.

Good Faith Good Faith Collection request is a provision for participant banks
Collection to raise a request for collection of funds when a
Request transaction/dispute is outside of the TAT defined for the
respective payment.

Mobile An electronic payment service approved/licensed, regulated and

overseen by the Central Bank of Oman for customers to
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Payments send/receive payments, and the under lying account might be a

normal bank account or a wallet.

MpClear An interoperable mobile payment switching and clearing central

infrastructure that connects the customers through their PSPs for
the smooth exchange of mobile payment financial transactions.

Push Payment A kind of payment that is initiated by a payer by debiting his own
account/wallet for the interest of a payee, and it is a form of a
direct credit.

Pull Payment A kind of payment that is initiated by a payee by debiting the

payer account/wallet for his own interest, and it is a form of a
direct debit.

MPIN A personal identification number or a password that prevent an

unauthorized people to access the mobile banking/mobile wallet
applications.

Payer A party of a financial transaction whose account/wallet will be

debited.

Payee A party of a financial transaction whose account/wallet will be

credited.

Merchant A person involved in a financial transaction who provides good or

service, and in turn receives money.

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3 Introduction
Central Bank of Oman as an operator of national payment systems has implemented
multiple payment systems like ACH, MpClear, ECC and RTGS. In payment system,
disputes may arise as a result of the payer claiming not executing/authorizing a
specific transaction or not receiving the service/ goods as agreed or any other
discrepancy that may arise due to technical & human error. Over the period of time
CBO and other stakeholders felt the necessity of implementing a standalone core
dispute payment system that can provide a platform for raising disputes pertaining
to all financial transactions emanating from all the payment systems, with proper
tracking, well defined SLA and mechanism to formally raise disputes and arbitration.

The objective of Dispute Management System (DMS), is to provide a flexible system

that allows payment system participants in Sultanate of Oman to register a
dispute/claim related to financial transactions processed in national payment system
for faster resolution with well-defined rules and TAT. The System by virtue of being a
Payment system will generate required financial entries based on the outcome on
disputes raised and create a NCP file to be processed in the RTGS system.

Currently the DMS will be a platform to address disputes and claims related to the
MpClear and ACH systems. As and when the new payments are integrated and
configured in DMS this operating rules book will be updated with relevant
information. Depending on the different payment system, the eligibility of a
transaction for raising dispute will vary.

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3.1 Introduction
Central Bank of Oman (CBO) in its capacity as the financial regulator and operator
of national payments system in the Sultanate of Oman, and in accordance with the
powers vested in it by the Banking Law issued by Royal Decree 114 of 2000 to
regulate banking business and the National Payment Systems Law (NPSL), hereby,
promulgates the following operating rules to govern the usage of Dispute
Management System in the Sultanate of Oman.

The CBO reserves the right to modify these operating rules as deemed necessary
and notify all the participants accordingly.

EFFECTIVE DATE OF IMPLEMENTATION

The operating rules stated in this document shall become effective on the first day
of system go live as declared by the Central Bank of Oman.

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4 Scope of the DMS

Dispute management system will provide following functionality for member banks
and CBO.

4.1 Member Banks

1. Payer bank shall raise “Chargeback request” on all successful debit
transactions (that are not reversed or canceled) provided the dispute is raised
within the defined TAT period of the respective payment system.

2. Payee Bank shall act on the dispute raised by the Payer banks by either
accepting the dispute or rejecting it with proper dispute reason code
provided. Depending on the Payment system configuration, dispute will
either be “Auto Accepted” or “Auto Rejected” please refer to the respective
Payment System section in this document.

3. Payer bank and Payee Bank shall use a Good Faith Collection request when a
transaction/dispute is outside of the TAT defined for the respective payment
system, good faith collection request can be initiated in two scenarios:

a. After expiry of TAT defined for Chargeback Request duration for the
respective payment System.
b. Good faith request can be initiated on a disputed transaction within
10 business days from the date of last dispute action (either accepted
from Payee or when TAT expires and Chargeback become Auto
Accepted).

The Good Faith Collection process is not mandated by CBO/competent

authority, although a TAT is defined in this document. Thus the acceptance
or rejection of a Good Faith Collection request is the member banks
discretion.

4. The payer bank will have an option to raise arbitration for a given dispute
(not applicable for Good Faith Collection), in case the bank is not satisfied
with the clarification/justification provided by the payee bank.

5. Good Faith Advance Refund: Good Faith Advanced Refund can be passed by
payee member bank. Applicable only to successful transaction that has no
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dispute initiated by the payer bank. Payer bank will not be allowed to raise a
dispute on a transaction that has a successful good faith refund processed.

6. Download settlement report and make necessary entries in the core-

banking/back office system.

7. Download Standard Dispute & Good faith Reports.

8. A provision to raise a dispute by a payee bank will be implemented in due

course of time after analyzing the feasibility and the impact for implementing
such a feature.

4.2 Central Bank of Oman.

1. Configure Payment System

1. Configure dispute reasons (for each payment system)

2. Dispute reject reasons (for each payment system)

3. Configure arbitration charges for each payment system

4. Configure TAT for different stages of disputes

5. Providing Arbitration Verdict for all Arbitration raised by member Banks

6. Generate and Process NCP file
7. Post Manual Adjustment Entries
8. Standard Dispute & Good faith Reports

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4.3 General Rules in DMS.

1. Since DMS will be a platform for processing disputes for multiple national payment
system DMS users profile will have provision to link a particular user to single or
multiple payment system. Based on this configuration the user will be able to view
and process disputes and reports.

2. The Member banks are expected to create a user email group on their respective email
server for which will be configured on DMS for sending alerts and notification, it will
be the responsibility of the member banks to ensure the group email id is updated
with the current active team members of the bank.

3. The DMS system will have a provision to configure TAT period for various dispute cycle
for each payment System, with a provision to define an extended TAT for disputes
with transaction amount greater than a certain pre-configured amount, this
configuration will be enabled in due course of time based on feedback & practical
scenarios .

4. There will be a single NCP file and settlement reports generated in the DMS for all
payment system linked. The settlement report will have section/fields to identify the
corresponding payment system. Member banks are expected to use this files/reports
to process the required entries in the core banking and back office system.

Arbitration verdict provided by CBO or the authorized entity will be in accordance to

applicable Omani Laws and based on circulars and directives issued by CBO from time
to time. In the absence of documented rules, arbitration verdict will be based on
industry best practices. The losing party is debited with the disputed amount (if
applicable) and incur additional arbitration fees to CBO/ authorized entity, as
prescribed by CBO. To start with, no arbitration fees will be charged to the banks.
However, CBO reserves the right to stipulate Arbitration fees at the right time. The
arbitration decision by CBO or the authorized entity does not impede the right of
either parties (payee & Payer) to take legal recourse under the Omani laws to appeal
such decision should they deem necessary.

5. Note: Network fee/Charges of the transaction will not be refunded in any type of
disputes or Good Faith collection.

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6. The DMS is a 24/7 payment system which facilitates raising of disputes throughout the
day. Disputes raised before 2:00 PM will be settled on the same business day. Any
disputes raised after 2:00 PM will be settled on the next business day.

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5 MpClear Dispute Rules.

5.1 Dispute Cycle
The customer/payer disputing the transactions typically initiates the Dispute Cycle.
The customer/payer contacts the bank where they hold the account or wallet
(payer/customer bank), with the disputed transaction. The bank is responsible for
deciding the eligibility of dispute.

The payee/merchant bank is required to respond to the dispute either by accepting

the dispute claim or initiate re-presentment with required evidence as defined in this
book within a stipulated timeframe.

The following illustration shows the dispute cycle.

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5.2 Dispute Cycle process constitutes below steps:

1. Chargeback request: A Chargeback request is initiated by the payer bank either

on request of customer dispute or by the payer bank based on internal
(technical & operational) reasons. The chargeback request should be made in
line with the valid reason code defined in this document.

2. Reply on chargeback request: The payee (Merchant) or the payee Bank under
certain conditions has the right to reject the Chargeback request, provided the
merchant or payee Bank can adequately provide evidence in line with reply to
charge back request reason code as defined in this document. The reply on
chargeback request in essence is to accept or reject the Chargeback request.

3. Second Chargeback request: The payer bank is allowed to raise a second

chargeback request in case they have valid reason to do so; this can be done
after the reply on the chargeback request is received from the payee bank.

4. Reply on second chargeback request: The payee (Merchant) or the payee Bank
under certain conditions has the right to reject the second Chargeback request
provided the merchant or payee Bank can adequately provide evidence in line
with reply to charge back request reason code as defined in this document. The
reply on chargeback request in essence is to accept or reject the second
chargeback request.

5. Arbitration: When both the Payer Bank and the Payee Bank fail to resolve a
dispute, the Payer Bank may request CBO or the authorized entity to review
the dispute and provide a verdict to the Payer Bank and the Payee Bank.

6. Payer bank and Payee Bank shall use a Good Faith Collection request when a
transaction/dispute is outside of the TAT defined for the respective payment
system.

7. Good Faith Advance Refund: Good Faith Advanced Refund can be passed by
payee member bank. This is applicable only to successful transaction that has
no dispute initiated by the payer bank. Payer bank will not be allowed to raise
a dispute on a transaction that has a successful good faith refund processed.

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5.3 Dispute Turnaround Time (TAT)

The submission of claims and tracing requests shall be subject to the following
limitation in time as shown in the following table.

Dispute Step P2P & P2B payments

Chargeback The payer Bank can initiate chargeback within 45 business days from the
request (CR) transaction date.

Reply on First The payee Bank should reply on the CR (by either accepting it or rejecting
Chargeback it) within 18 business days from the charge back request date, failing to
request (RCR) do this, the system will auto accept the dispute and the amount will be
debited to the payee bank.

Second The payer Bank will be allowed to initiate SCR within 18 business days
Chargeback from the RCR date, in case the payer bank/customer is not satisfied with
request (SCR) the RCR.

Reply on The payee Bank should reply on the SCR request (by either accepting it or
Second rejecting it) within 18 business days from the SCR date, failing to do this,
Chargeback the system will auto accept the dispute and the amount will be debited to
request (SRCR) the Payee bank.

Raise Wherever applicable, the payer may raise arbitration within 10 business
Arbitration days from the SRCR date.
(payer )

Arbitration by CBO shall take 30 calendar days for taking a decision on the arbitration
request.
CBO/competent
authority. After 30 days the case will not be closed, the DMS system will send a
daily reminder till the action is taken by CBO.

Good Faith Good faith collection request can be initiated in two scenarios:
Collection
request a) On expiry of TAT for chargeback:
The chargeback request has not been raised within the allowed TAT
period, hence the payer bank will be allowed to raise a good faith.
However, such transaction should not be older than 180 days of the
transaction.

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Dispute Step P2P & P2B payments

b) After raising chargeback:

Good faith request can be initiated within 10 business days from the
date of last dispute action (either accepted from Payee or when TAT
expires and Chargeback become Auto Accepted).

 Once a good faith collection request is raised, the party expected

to reply to the good faith collection request should reply no later
than 18 business days.

 Interchange fee will not be reversed in case of good faith

collection.

 Good Faith can only be raised once for a given transaction.

5.4 Allowed chargeback request & reply reason code

The below reason code will be periodically updated based on the new scenarios
that emerge from time to time.

Chargeback request Reply on chargeback

request
Code Reason Code Description Supporting Evidence
100 Transaction 200 Credit previously If appropriate credit has been processed to the
Amount in- issued customer, evidence should be provided. Provide a
correct legible or complete copy of the receipt.
201 Chargeback Provide a legible or complete copy of the receipt,
remedied with or information that was previously missing.
explanation
202 Dispute TAT
expired
101 Duplicate 203 Credit previously If appropriate credit has been processed to the
Processing issued customer, evidence should be provided. Provide a
legible or complete copy of the receipt.
204 Chargeback If customer participated in multiple transactions,
remedied with provide appropriate documentation, such as sales
explanation receipts, invoices, .etc.
102 Goods and 205 Credit previously Provide proof of information that credit (refund)
services did issued was processed, if merchandise was returned or
not conform services were cancelled. Provide a legible or
complete copy of the receipt.

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Chargeback request Reply on chargeback

request
Code Reason Code Description Supporting Evidence
to their 206 Chargeback Provide details of the merchandise information
description remedied with and invoices to refute the customer’s claim.
explanation
103 Non Receipt 207 Chargeback If Chargeback issued before the delivery date, the
of Goods or remedied with sales receipt indicating the delivery date should be
Service explanation provided.
208 Chargeback Proof of Delivery or proof that the service has
remedied with been provided by expected delivery date.
explanation
104 Customer 209 Requested Provide copy of the invoice/receipt related to the
does not documentation transaction.
recognize supplied
transaction
105 Customer 210 Chargeback Provide copy of the invoice/receipt related to the
claims did remedied with transaction.
not do this explanation
transaction
000 Dispute accepted The Transaction Payee/merchant accepts the
by the dispute.
Payee/merchant

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5.5 Accounting Entries

Accounting entries for any disputed transaction is done after the dispute receiving
party accepts the dispute or when the dispute receiving party has not acted on the
particular transaction within the defined TAT period. DMS for MpClear system will
operate as a payment system which means for all approved disputes, good Faith
transactions & Arbitration cases fund effecting will be done by creation of an NCP
through the RTGS system and corresponding entries will be reflected in the
Settlement report. However fund effecting for end customer is participant banks
responsibility.

No Type of Dispute Transaction Amount Interchange fee

1 Full transaction amount Completely reversed on Completely reversed

dispute approval of dispute on approval of
dispute

2 Partial transaction Requested amount reversed on Not reversed

amount dispute approval of dispute by the
other party

3 Good Faith Collection Requested amount reversed on Not reversed

request approval of dispute by other
party

4 Good Faith Advance Transaction amount reversed Completely reversed

Refund on approval of dispute by Payer
Bank

5 Arbitration raised by the Debit Payee Bank RTGS and Completely reversed
payer/debit bank and Credit payer bank account with
dispute won by Payer the disputed amount
bank Debit Payee Bank RTGS account
and
Credit CBO revenue account
with the arbitration charges
6 Arbitration raised by the Debit Payer Bank RTGS account Completely reversed
payer/debit bank and and Credit CBO revenue
dispute won by Payer account with the arbitration
bank charges

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5.6 Transaction Liability

Since the mobile payment processed will be largely based on the customer-
authenticated push or pull transaction, it is the payer banks responsibility to ensure
that the customer initiated transaction is authenticated sufficiently. In the event of
a fraudulent transaction the below liability shift will be applicable.

Banks have to ensure that the mobile application provided to the customers and
merchants are secure and must implement all information security control as per
industry best practice and any future CBO recommendation.

Transaction Type Mode Authentication Liability

P2P Push/pull Login Authenticated & Payer Bank

Transaction PIN Verified

P2B Push/pull Login Authenticated & Payer Bank

Transaction PIN Verified

P2P Push/pull Login Authenticated & Payer Bank

Transaction PIN not
Verified

P2B Push/pull Login Authenticated & Payer Bank

Transaction PIN not
Verified

P2B from a Fake Push/Pull Login Authenticated PIN Payee Bank

merchant/website Verified

Note: The Liability Shift does not apply for Good Faith Collection Request.

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6 ACH Dispute Rules.

Disputes in ACH will mainly be of the following category:
1. Direct credit – Where the payer raises a request for charge back for a transaction
that is processed erroneously.
2. Direct Debit- Where the payer raises request for charge back for an amount
debited to his account based on a Mandate.
A dispute process will be initiated by payer bank submitting a claim attached with the
appropriate supporting documents.

6.1 Dispute Cycle

The customer/payer disputing the transactions typically initiates the Dispute Cycle.
The customer/payer contacts the bank where they hold the account
(payer/customer bank), with the disputed transaction. The bank will raise a dispute
through the dispute management system on behalf of its customer. The bank is
responsible for deciding the eligibility of dispute.

The payee bank is required to respond to the dispute either by accepting the
dispute claim or reject it based on a reason code defined in the DMS system.

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6.2 Dispute Cycle process constitutes below steps:

1. Dispute request: A Dispute request is initiated by the payer bank either on

request of the customer/payer or by the payer bank itself based on internal
(technical & operational) reasons. The Dispute request should be made in line
with the valid reason code defined in this document.

2. Reply on dispute request: The payee bank can verify the case/get confirmation
from the payee/customer and under certain conditions has the right to accept
or reject the dispute request, provided the payee Bank can adequately provide
evidence in line with reply to dispute request reason code as defined in this
document. The reply on dispute request in essence is to accept or reject the
dispute request. Only in case a dispute is accepted by the payee bank the payee
bank will be debited and the payer bank will be credited.

3. Arbitration: When both the Payer Bank and the Payee Bank fail to resolve a
dispute, the Payer Bank can request CBO or the authorized entity to review the
dispute and provide a verdict to the Payer Bank and the Payee Bank.

4. Good Faith Advance Refund: Good Faith Advanced Refund can be passed by
payee member bank. Applicable only to successful transaction that has no
dispute initiated by the payer bank. Payer bank will not be allowed to raise a
dispute on a transaction that has a successful good faith refund processed.
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6.3 Dispute Turnaround Time (TAT)

The submission of claims and tracing requests shall be subject to the following
limitation in time as shown in the following table.

Dispute Step Direct Credit & Direct Debit payments

Dispute request The payer Bank can initiate chargeback within 30 Business days from
the transaction date.

Reply on The payee Bank should reply on the CR (by either accepting it or
Dispute request rejecting it) within 10 business days from the charge back request
date.
Payee bank failing to act on dispute, the system will be auto rejected
the dispute with no financial entries passed.

Raise Wherever applicable, the payer bank may raise arbitration within 10
Arbitration business days from the RCR date.
(payer )

Arbitration by CBO shall take 30 business days for taking a decision on the
arbitration request.
CBO/authorized
entity. After 30 days the case will not be closed, the DMS system will send
a daily reminder till the action is taken by CBO.

Good Faith Good faith collection request can be initiated in two scenarios:
Collection
request c) On expiry of TAT for chargeback:
The chargeback request has not been raised within the allowed TAT
period, hence the payer bank will be allowed to raise a good faith.
However, such transaction should not be older than 180 days of the
transaction.

d) After raising chargeback:

Good faith request can be initiated within 10 business days from
the date of last dispute action (either accepted from Payee or
when TAT expires and Chargeback become Auto Accepted).

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Dispute Step Direct Credit & Direct Debit payments

 Once a good faith collection request is raised, the party

expected to reply to the good faith collection request should
reply no later than 18 business days.

 Interchange fee will not be reversed in case of good faith

collection.

 Good Faith can only be raised once for a given transaction.

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6.4 Allowed dispute request & reply reason code

Dispute request Reply on dispute request
Code Reason Code Description Supporting Evidence
300 Direct Credit: The payer 401 Evidence provided for The payer bank may submit any legitimate
has credited erroneous correctness of document that provides evidence to
amount to payee transaction prove the transaction was erroneous.
The payee bank may submit any
legitimate document that provides
evidence to prove the transaction was
legitimate.
301 Direct Credit: The payer 402 Evidence provided for The payer bank may submit any legitimate
has sent duplicate correctness of document that provides evidence to
transaction and request transaction prove the transaction was duplicate.
of refund extra amount
302 Direct Credit: The 403 Evidence provided for The payer bank may submit legitimate
transaction was correctness of document that provides evidence to
processed due to transaction prove the transaction was processed due
Technical or operational to technical / operational error.
issues

303 Direct Debit: Direct debit 404 Dispute rejected The payer bank may submit any legitimate
instruction cancelled by document/mandate copy that provides
payer , but Amount was evidence to prove the transaction was
debited without incorrect.
mandate available The payee bank may submit any
legitimate document /mandate copy that
provides evidence to prove the
transaction was legitimate.
304 Direct Debit: Payer 404 Dispute rejected The payer bank may submit any legitimate
disputes time, amount document/mandate copy that provides
or frequency of advance evidence to prove the transaction was
notice and has incorrect.
requested single The payee bank may submit any
payment to be legitimate document /mandate copy that
countermanded provides evidence to prove the
transaction was legitimate.

000 Dispute accepted by

the Payee bank

PUBLIC

Dispute Management System – Operating Rules Page: 23 of 24

Central Bank of Oman ‫الـبـــــنك المـــركــــزي العمـــــــاني‬

6.5 Accounting Entries.

DMS for ACH system will operate as a payment system which means for all approved
disputes, good Faith transactions & Arbitration cases fund effecting will be done by
creation of an NCP through the RTGS system and corresponding entries will be
reflected in the Settlement report. However fund effecting for end customer is
participant banks responsibility.

No Dispute result Accounting entries

1 Dispute raised by the payer/debit Debit Payee Bank RTGS account and
bank and accepted by Payee bank Credit payer bank RTGS account with the
disputed amount

2 Dispute raised by the payer/debit No financial entries

bank and rejected/auto rejected by
Payee bank

3 Good faith raised by the initiating Debit initiating Bank’s RTGS account and
bank and approved by the accepting Credit accepting Bank’s RTGS account
bank with the disputed amount

4 Good faith raised by the initiating No financial entries

bank and rejected/auto rejected by
accepting bank/system

5 Arbitration raised by the payer/debit Debit Payee Bank RTGS account and
bank and dispute won by Payer bank Credit payer bank RTGS account with the
disputed amount
Debit Payee Bank RTGS account and
Credit CBO revenue account with the
arbitration charges
6 Arbitration raised by the payer/debit Debit Payer Bank RTGS account and
bank and dispute won by Payee bank Credit CBO revenue account with the
arbitration charges

PUBLIC

Dispute Management System – Operating Rules Page: 24 of 24