Over the past few years, fraudsters have become very comfortable and quite adept at using debit order processes to defraud the unsuspecting public out of their hard-earned money. At the same time, the banking industry has made it very easy for an account holder to dispute and reverse debit orders processed on their accounts.
Keith Wrede, Deputy Managing Director for NuPay, explains: “This can be considered a fraudulent action on the part of the account holder against legitimate debits that are made by honest companies, which are left with very little room to fight back. A debit order for a loan repayment, goods delivered or services rendered is processed by a business in accordance with the mandate obtained from the debtor. However, at the click of a button the debtor can reverse the payment without affording the business any say in the matter.”
Wrede adds: “DebiCheck is the new tool that has come into play to fight fraud from both angles. Simple errors and deliberate fraud have translated into account holders’ information being at risk. DebiCheck now enables account holders to verify their debit orders before their account is debited.”
Payments Association of South Africa (PASA) has embarked on a process whereby prospective businesses wishing to process DebiCheck debit orders will be checked through a pre-onboarding check. This process will entail a comprehensive look at previous complaints of fraud as well as at excessive dispute rates by the applicant or associated entities, which can translate into the business entity being denied access to DebiCheck.
Each DebiCheck processor will be uniquely identified through an abbreviated short name, which will be linked to each debit order processed. This will print on the consumer's bank statement and make it easy to trace the origin of the debit order processed on consumers' accounts.
In addition, PASA, as custodian of the National Payment System, will also be monitoring dispute rates and complaints through various channels and will have the authority to instruct a bank to terminate its relationship with the processor. Through this debit order abuse process, fraudsters will be promptly identified and immediately removed from the payments landscape.
DebiCheck mandated debit orders will be a bit more difficult to set up, but the benefit of using this tool far outweighs the effort.
As a debit order processor, businesses will have to obtain authorisation from the consumer to process a debit order against their account. However, once that is done, the business can be assured that the collections it facilitates cannot be reversed. This would be dependent on businesses following the stipulated rules set out by the relevant governing bodies.
Wrede says: “One of the main benefits for customers is the fact that the pre-authorisation process will now provide them with more control over their accounts. Provided that the relevant business follows the stipulated agreement obtained through the mandate, and processes the said debit order on the agreed date for the agreed amount, the bank will no longer allow the consumer to reverse the debit.”
This provides businesses with absolute finality with regard to payments. The haphazard disputes experienced under non-authenticated early debit orders, otherwise known as NAEDO debits, will now be a thing of the past.
Business owners have become accustomed to certain NAEDO features that are still considered as important tools in their arsenal. Tracking is one such tool that has been used with great success when a collection has failed on the first presentment. Tracking is still available, albeit for a maximum of 10 days.
The collection date on a debit order can still be changed, although it may jeopardise the successful processing of the debit order if the consumer did not re-authorise the change. The same rule applies to the amount to be debited by the business. As long as the mandated amount is debited, the consumer will not be able to reverse the payment.
A maximum of two instalments per payment cycle will be eligible for collection on any arrears amounts.
Businesses should find a strategic partner and service provider in NuPay, which is able to stay at the forefront to meet their business objectives within the payments and collections space. NuPay will continue working closely with DebiCheck to ensure that customer service delivery is smoothly regulated according to industry standards.
NuPay has developed processes and systems which have been designed to make life as easy as possible by allowing a seamless business migration from AEDO and NAEDO transactions to DebiCheck.
NuPay will provide businesses with the tools to help them get authorisation from their debtors so that DebiCheck transactions can be processed securely. Secure debit orders are not new to NuPay; they have just been amended to fight fraud more effectively.
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