The National Australia Bank has confirmed it was the primary institution which processed a toxic batch of direct debit transactions on Monday that emptied the bank accounts and maxed out the credit cards of many RACV customers, some to the tune of $50,000.
As the high severity payments disaster rolled into its fourth day, iTnews can reveal that it was NAB’s merchant acquiring arm that ran a transactional file supplied by RACV to its end, allowing a slew of erroneous deductions to go through – sometimes hundreds at a time for individual accounts.
“We’ve been working hard with RACV to quickly resolve this issue and process the refunds for affected customers as quickly as possible. In fact, many customers’ accounts have already been corrected,” a NAB spokesperson told iTnews.
Ironically, it will be NAB's account holders who will be able to access their refunds first because they will land directly rather than taking time to clear through the complex web of bilateral interbank links.
The incident is being closely watched by regulators because of the high degree adverse impact on consumers that has ensued.
Many affected RACV customers have been belatedly told by the besieged insurer that they will have to wait as long as five days for refunds to be made available, despite being initially told all refunds had been processed.
“Five days to be refunded, what an absolute joke. No money in the bank for food, petrol and most importantly mortgage. And no compensation coming our way, bloody disgraceful RACV !!” said one poster to Facebook.
The remedy for customers whose credit cards limits were blown by RACV’s dud file is even more complex because of the complicated nature of reversing payment authorisations.
It is understood that while NAB ran the defective file from RACV through to completion, it was the bank which first detected the problem and then moved to run refunds, contacting RACV in the process.
Part of the issue appears to be that batches that once rolled across the night now process far more quickly, thus making it far more difficult to stop and correct a run mid-stream.
However many crucial questions about the incident remain unanswered or unresolved, including the total number of accounts affected or the total dollar amount of funds wrongly debited.
A major headache for affected RACV customers, as well as banks and credit cards dragged into the debacle, is now sorting out the raft of loan and mortgage default penalties, overdraw fees and negative credit ratings impacts that will hit customers wrongly cleaned out of funds.
RACV has refused to publicly disclose key details around how many of its two million customers were hit by the incident, nor if it has extended emergency financial assistance to affected customers. Instead, the insurer has maintained it is dealing with clients’ needs on a case by case basis.
Customers, who have taken to social media, remain angry and critical over RACV’s handling of the situation, especially the lack of disclosure and detail as well as lengthy call centre waiting times when they have been left broke and stranded.
The high profile incident has also strained between RACV and NAB and is likely to complicate the insurer’s relationship with banks going forward.
It is understood that RACV’s merchant acquiring account was put up for pitch to other institutions before the incident occurred, a slab of business that will now likely be less appealing in terms of price because of its potential for reputational loss.
Merchant acquiring, where banks essentially collect and process payments for businesses, has become an increasingly commoditised space over the past decade as margins and processing fees continue to fall.