Debit order abuse has been a cumbersome and expensive exercise, costing banks millions of rands because of unauthorised debit orders going off consumers' accounts. With DebiCheck now live, consumers have regained power and control to electronically confirm their debit orders with their bank on a once-off basis, and banks are reaping positive results after taking steps to curb fraudulent debit orders through the DebiCheck system.
The industry-wide initiative, set out by the South African Reserve Bank (SARB) and led by the Payments Association of South Africa (PASA), aims to crack down on unauthorised debit orders, protecting the consumer against fraudsters. It has also become too easy to take back funds (dispute and reverse) that have already been paid out.
Keith Wrede, Deputy Managing Director for NuPay, a division of JSE-listed Altron, says: “Debit order abuse has become a major issue in South Africa, with too many people falling victim each year/month. While some companies have acted in bad faith by processing invalid debit orders to consumers' bank accounts, there have also been consumers who have avoided paying valid debit orders. Between the banks, PASA and the business sector, a lot of time, effort and money has been spent to develop a safer and more secure debit order system.
“It will now be up to the consumer to authenticate and approve a debit order at the start of the new contract, and the consumer will need to agree to the terms of the payment schedule ensuring the user authorises the details. This is known as Authorising the Debit Order Mandate,” says Wrede.
There are other ways to authorise the debit order mandate, such as through cellphone banking apps, Internet banking and even at the ATM, but to speed things up, having your phone number registered at the bank will be the quickest.
The quickest way that the bank can use to check with you will be by sending you a USSD message with the details of the mandate, and the user will need to reply to the USSD message. Of course, this will depend on the consumer's bank having the correct cellphone number on record.
If your bank does not have your cellphone number, it can delay the finalisation of your contract with the DebiCheck user. The consumer also needs to understand that if the DebiCheck debit order is processed according to the terms that you agreed to, you will not be able to reverse the transaction (unless you are asking the bank to investigate a fraud charge against the DebiCheck user).
DebiCheck is safer than normal debit orders, because:
- I have to authorise the mandate details with the bank, so both the bank and I will know what is coming and when it is due.
- The bank will check the details before allowing my account to be debited.
- I will be able to suspend the mandate if anything goes wrong.
- I will be able to claim the funds back under certain conditions, but
I have certain obligations as well:
- I must ensure that my correct cellphone number is always registered with the bank.
- I must make sure my account has enough money to honour the transaction.
- I cannot reverse a transaction that has been processed according to the terms of the agreement.
For a company like NuPay, this means strengthening relationships with banks and their customers to ensure the end-consumer leverages the full benefits of DebiCheck and to ensure customer service delivery is smoothly regulated according to industry standards.
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