Unlocking Financial Control: The necessity for safer and more secure debit orders 

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In response to a surge in unauthorised debit orders and an ever-increasing number of disputes of valid mandates by consumers, there was a requirement to review the manner in which mandates were being obtained from Consumers specifically for Early Debit Orders. To address this challenge, the South African Reserve Bank (SARB) tasked the Payments Association of South Africa (PASA), with finding a robust solution. This initiative culminated in the launch of DebiCheck in 2017, a system designed to bolster security and equality within the early debit order payments environment.  Amplifin’s Chief Brand Officer, Steven Maier, highlights the transformative power of the solution that empowers individuals and safeguards businesses. 

Despite DebiCheck not being a new concept in the South African payments world, many business owners remain unaware of its efficiency and functionality, often mistakenly believing that EFT Debit Orders are the only solution. Through our engagements with numerous business owners, this misconception has become apparent. It is for this reason that we are sharing this article with readers, to make them aware of all the options available to them regarding debit order solutions. 

“Authenticated Collections” or “AC”, also known as DebiCheck, is an advanced debit order solution that operates through an authentication process for each DebiCheck debit order, providing consumers with greater visibility and control over their transactions. The value of this solution is how it helps all participants feel more in control and provides protection for both the consumer and the business,” says Maier.  

There are several reasons why DebiCheck is immensely beneficial, and here are five of the most relevant to the business: 

Mandated and authorised 

“When an agreement is concluded between the consumer and the business and the agreed upon repayment method is a DebiCheck debit order; the consumer needs to electronically confirm the mandate details. This is a once-off authentication process per agreement as long as the agreement parameters remain constant and is a significant component of DebiCheck. Why? Because both parties agree to, and are fully aware of, the terms of their financial agreement and DebiCheck debit order’s details, from the start. If a DebiCheck debit order is presented for processing and where the collection parameters match that of the authenticated mandate, there is no valid reason for the Consumer to dispute the collection and subsequently have the successfully collected funds reversed from the business account into theirs and therefore the dispute will not be entertained” adds Maier. 

The DebiCheck mandate is provided to the consumer by their bank and a successfully authenticated DebiCheck mandate is then registered by the bank in their DebiCheck Mandate Register. Their bank will then verify that all collections that are presented against their clients’ bank accounts are matched against the mandate in the register and if the collection parameter matches the mandate parameter the bank will process the DebiCheck debit order and not permit a dispute by the consumer to result in a reversal of successfully collected funds, alternatively, if the parameters of the collection do not match the parameters of the mandate the bank may either outright reject the collection or process the collection but the successfully collected funds may be subject to a reversal should a dispute be raised by the Consumer. This is an invaluable step as it minimises the risk of someone purposefully avoiding their payment responsibilities by reversing debit orders or using disputes and reversals to manage their personal cashflow. It also prevents businesses from processing debit orders without someone’s consent.  

Accessible and Seamless 

The electronic authentication mechanisms used to obtain authentication from Consumers are bank-dependent and can be done through various channels such as internet banking, mobile banking apps, USSD on the consumer’s mobile phone, at an ATM, in a bank branch or face-to-face using a bank card and PIN on a Card Payment Device. 

This accessibility to multiple forms of DebiCheck debit order authentication makes it easy for the consumer to authenticate the DebiCheck debit order before it’s processed against their bank account.  

Higher Collection Rates 

For businesses, one of the significant DebiCheck benefits is that collections are processed early in the morning which is usually aligned with when consumers receive their salaries and wages. This reduces the chances of you receiving an ‘Insufficient Funds’ response from the bank when attempting to debit a customer’s bank account, a problem that often occurs when debit orders are processed later in the day and the customer has already accessed, transferred or utilised the available funds that were potentially earmarked for debit orders. 

Credit Tracking Functionality 

Businesses can use the credit tracking functionality in DebiCheck to have debit orders that have failed due to insufficient funds automatically moved into Tracking. This means that a collection that has failed due to insufficient funds will be automatically represented for up to a maximum of 10 days after the original collection day, which significantly increases the probability of a successful collection as it alleviates a “one attempt only” approach.  

No Presumption of Payments 

DebiCheck ensures that businesses receive collection responses much sooner than with conventional EFT debit orders. You will know if a debit order has been paid, which ones haven’t been paid with reasons, and which ones are still in Tracking, this provides businesses with the ability to update their accounting solution in near real-time and subsequently service repeat customers more efficiently and follow up on unpaid debit orders immediately. Moreover, due to there being no presumption of payment; true and accurate settlement of funds collected greatly assists with cash flow management. 

Continuous Evolution in Disputability Rules 

One of the most positive changes in recent years is the continuous evolution of disputability rules, leading to a reduction in disputes due to the new rules implemented in October 2023. The change to the rules was designed to ensure that non-disputability remains unaffected when the date adjustment indicator is set to “Yes,” indicating that the payer has mandated a date adjustment, and the collection is aligned with the earliest business day preceding a weekend or public holiday. This has provided businesses with more flexibility and certainty in their collections process. 

“This advanced debit order solution provides both consumers and businesses with richer financial controls while reducing the risks and improving cash flow. Amplifin supports the creation of DebiCheck mandate requests that can be authenticated by consumers using all authentication mechanisms and has solutions and devices specifically customised according to your DebiCheck requirements. In addition, our front-end management solution (ALLPS-i) and our ability to support integrations with your Debtor Management System makes the efficient management of your DebiCheck debit orders possible and puts your business on a solid financial foundation while supporting your customers and your cash flow,” concludes Maier. 

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