What is the settlement risk?

When a payer confirms an Internet Banking payment they are making a final instruction to their bank to transfer funds to the payee. Payments can only be dishonoured in very limited circumstances:

  • The financial failure of a bank; or
  • where the payer is subsequently found to be insolvent

The Merchant should have every expectation they will receive payment subject to bank terms and conditions. Except in the above limited circumstances, dishonours or chargebacks cannot be applied to payments processed via POLi without the Merchant’s express approval (such approval can be withheld).

Potential Settlement risk associated with some ANZ payments

New Zealand banks are reporting an increase in attempted fraudulent transactions. Many of these are due to the theft of bank customers’ usernames and passwords obtained fraudulently by phishing scams, phone scams or text scams.

All banks take measures before they process any electronic transaction to identify fraudulent transactions. Transactions that do not pass a bank’s fraud mitigation measures are stopped before any payment is processed. If a POLi transaction is involved and is considered fraudulent, the transaction will fail. The POLi status is delivered to the merchant as being “Failed”.

We have seen examples where the ANZ Bank processes the payer’s debit transaction to the point a receipt is issued. Then, if ANZ Bank deems the payment fraudulent and the credit has not been transferred to the payee’s (POLi Merchant’s) bank account, ANZ stops the payment.
This means there is a slight possibility a customer transaction that has been completed successfully in POLi may have been stopped by ANZ Bank if it is subsequently suspected to be fraudulent. Despite the transaction status being reported as “Completed” you will not receive the expected credit in your bank account.

For most POLi merchants the risk is very low of ever experiencing a reversal of this nature. However, for high-risk merchants, including foreign exchange/remittance providers, wallet providers, crypto currency traders, high value technology providers etc., there is a possibility that successfully completed POLi transactions may be stopped by ANZ. For high-risk merchants we recommend goods and services not be provided until ANZ Bank payments have been verified as paid and settled in your bank account.