DebiCheck is the new type of Early Debit Order in South Africa. A DebiCheck collection is one that the consumer [debtor] confirms electronically on a once-off basis at the start of the contract. Its purpose is for the debtor to confirm and authenticate [approve] the details of the collection [debit order] with his bank prior to any collections being made. In this way, the debtor’s bank has sight of approved mandate information and what can validly be collected off the debtor’s bank account.
An Early Debit Order (EDO) is an early window collection instruction that is first presented for collection on the debtor’s bank account immediately after the banks’ salary credit run.
For example: A debtor’s salary is marked as a salary payment and dated for the 25th of each month. As per industry rules the salary is deposited into the debtor’s bank account at approximately 00h05 on the 25th. A standard EFT collection dated 25th would only be presented for collection at approximately 22h00 on the 25th. An Early Debit Order dated 25th would be issued on the debtor’s bank account for collection at approximately 00h15 – immediately after the salary credit run.
An Early Debit Order can also be requested to monitor [track] for incoming credits on the debtor’s bank account, for a specified period of days, if the initial collection request failed due to insufficient funds.
An early window collection precedes a standard EFT collection and has first ‘chance’ at the debtor’s available balance. Early window collections also include a tracking option whereby the collection instruction monitors the debtor’s bank account for a credit that is equal to or more than the amount to be collected and will immediately reserve the funds for fulfilment of the debit order.
Currently early window collections in South Africa fall under the EDO umbrella and are namely;
AEDO – Authenticated Early Debit Order (Debtor is present and authenticates his banking details with his bank card and PIN)
NAEDO – Non-authenticated Early Debit Order (Debtor may or may not be present and authentication by card is not done)
During the past few years it has been noted that debit order abuse in South Africa has increased. On the one hand, there has been an increase in the number of debit orders being processed to debtors’ bank accounts without their consent. On the other hand, debtors have increasingly been disputing debit orders which they have agreed to, mostly to manage their cash flow. For these reasons, the South African Reserve Bank (SARB) issued a directive to the banking industry to address these issues.
DebiCheck, whilst maintaining the key components of EDO that have proven to be effective in debit order management, also introduces electronic mandate authentication by the debtor for all DebiCheck collections.
Creditor: the supplier of the service or goods. The recipient of the collection (payee)
Sponsoring / Creditor Bank: the banking institution that manages the creditor’s bank account
Paying / Debtor Bank: the banking institution that manages the debtor’s bank account
BankservAfrika: The switch that facilitates the interbank transfer of collection instructions and settlement payments between the banking institutions
Debtor: the consumer who has contracted with a supplier for services or goods. The payer
A contract is the legally binding agreement between creditor and debtor for the terms and conditions for services and/or goods supplied. The corresponding mandate is the authority given to the creditor by the debtor to collect funds from the debtor’s bank account, and specifies the agreed upon date of collection and the amount to be collected.
To electronically confirm the mandate the debtor confirms the details of the collection, such as the amount and collection date. This confirmation is made on an electronic device i.e. mobile phone, banking app, personal computer or perhaps an ATM, to mention a few of the methods available to the debtor. The debtor’s bank will advise the debtor which methods are available to use in his bank.
An electronic mandate must be raised by the creditor and authenticated [approved] by the debtor before a DebiCheck collection can be successfully submitted by the creditor. This allows the debtor to have a level of control on debits they allow on their bank account and protects the creditor from invalid disputes.
The electronic mandate is registered by the creditor through the creditor’s bank to be stored at the debtor’s bank. Once the electronic mandate is authenticated by the debtor it is deemed valid and will be used by the debtor bank to confirm all subsequent DebiCheck collections conform to the agreed terms of payment.
The banking industry will be educating the consumer market on the new DebiCheck process, but there is an expectation that the creditor will also guide the debtor (his customer) through the process.
The debtor will receive an SMS from his bank to inform him that there is a mandate that needs his response.
Real Time: A Real Time Transaction Type 1 (TT1) mandate applies to a mandate request that will be initiated for approval by the debtor via a Push USSD. The timeframe for this type of mandate is 120 seconds i.e. from receipt of the request at the creditor bank, presented to the debtor by his bank and response back to the creditor (be it approved, rejected or timed out)
Delayed Real Time: A delayed Real Time Transaction Type 1 (TT1) mandate applies to a mandate request that is submitted by the creditor and lodged with the debtor bank within 60 seconds for the debtor to approve. The debtor has until 20h00 on the same day to approve or reject the mandate, thereafter the mandate will expire. At any time during that day when the debtor approves / rejects this type of mandate the creditor will receive the feedback within 60 seconds.
Batch: A Batch Transaction Type 2 (TT2) mandate is submitted by the creditor during the day for actioning by the creditor bank overnight to the relevant debtor banks. The mandate must be made available to the debtor for approval by latest 08h00 on the day (day 1) following the initial request. The debtor then has until 19h00 the following day (Day 2) to approve his batch mandate, thereafter the mandate will expire. Responses to batch mandate requests will be returned to the creditor from the creditor bank throughout the two day period at prescribed intervals.
Upfront Authentication: An upfront authentication type 3 (TT3) mandate applies to a face-to-face interaction between the creditor and the debtor with the debtor card present. The debtor will swipe his bank card and enter his PIN to approve the mandate, and in this way, the authentication key is established upfront. The mandate registration can then be completed in real time without any further action required from the debtor.
Fixed: a fixed mandate is used when the instalment amount is known and does not change. This mandate type allows also for a maximum instalment amount to cater for late payment and arrear interest calculation.
Variable: a variable mandate is used where amounts due for collection can be amended by the creditor in relation to variables that are known and approved by the debtor e.g. annual increases and interest rate linked loans.
Usage Based: a usage based mandate is used where the collection amount is variable and may not be known upfront. A maximum amount is approved by the debtor and the instalment must be within this threshold.
Yes. The method of submitting a mandate i.e. real time, batch or pre-authenticated does not prescribe the type of instalment (fixed, variable or usage based) that the creditor can choose.
The approved mandate will not expire if the creditor registers an electronic mandate at the start of a contract and does not use it for DebiCheck collections within a set period. The mandate will remain active until it is required, or cancelled, by the creditor.
The banks will offer various channels for the debtor to use to approve or reject his mandate.
This may include, but is not limited to, the following:
If the initial mandate request expires or is rejected by the debtor, the creditor can resubmit the mandate request with the same contract reference and mandate details.
However, if the mandate is approved, or is still pending a response from the debtor, a re-submission of a mandate request with the same contract reference will be deemed a duplicate and rejected by the debtor bank.
Re-authentication is dependent on what information is changed on the mandate. Debtor details such as a change to the debtor bank account number (but still in the same bank) must be re-approved, as are mandate details such as instalment amount and collection day.
Information not deemed necessary for re-authentication are supporting details that do not have a direct impact on the collection process, for example debtor email address.
The creditor will need to register a new mandate for the debtor for his new bank account and the debtor will need to re-authenticate. The creditor should also cancel the old mandate for the debtor’s previous bank account.
The contract between creditor and debtor will specify the length of the agreement. The electronic mandate does not specify an end date that aligns to the contract to allow for arrear collection instructions after the original contract period.
When the contract between creditor and debtor is complete and the approved electronic mandate no longer applies, the creditor is expected to issue a cancel mandate request. This will close [cancel] the mandate and should any future DebiCheck collections be submitted in error referencing the cancelled mandate, they will be rejected. The debtor is not required to approve the request for cancellation and will receive an SMS notification that the mandate has been cancelled.
No, the mandate can only be cancelled by the creditor.
A mandate will be suspended by the debtor bank in two different cases:
Yes. When a mandate is suspended then any collection instruction currently in tracking will be blocked prior to being presented on the debtor bank account for collection.
No. Raising an electronic mandate does not prescribe that the debit order must also be processed via a DebiCheck collection instruction. The creditor may opt to raise an electronic mandate against the debtor and process the corresponding debits on a standard EFT debit order until an early window debit order is required.
It must be noted however that a DebiCheck collection cannot be made without an electronic mandate and that EDO (NAEDO and AEDO) collections will be phased out by October 2019.
If the creditor has a valid contract and an alternate mandate (in any legally acceptable format) the creditor can still choose to use another collection method to collect the amount due.
Until the mandate amendment is approved the existing mandate terms apply.
If the creditor has submitted an amendment to a mandate e.g. change of date or amount and the mandate has not yet been approved by the debtor, the creditor can still submit a DebiCheck collection instruction, but the DebiCheck collection instruction must prescribe to the existing mandate criteria, and not the amendment criteria.
The DebiCheck collection instruction needs to identify the type of collection, namely;
If the approved mandate specified that the collection date could be moved, then the creditor may present the collection instruction earlier than the specified collection date.
If the agreed to collection date falls on a non-business day (Sunday or a Public Holiday) the creditor may opt to collect earlier on the debtor’s bank account. An example of this would be the debtor’s salary date of 25th falls on a Sunday and his employer pays him a day earlier, so the creditor would submit the collection for 24th.
Yes. DebiCheck collections, both new instructions being received as well as instructions currently in tracking on the debtor bank account will be re-randomised daily. During the phasing out of EDO, all early window collections will be randomised together.
This follows the current randomisation methodology used by EDO (NAEDO and AEDO).
A debtor dispute is the reversal of the successful collection that has already been actioned on the debtor’s bank account. A stop payment is an instruction to the debtor bank to stop all future collections for a specific debit order.
If the debit order, with a corresponding electronic mandate, has a stop payment instruction raised against it, the electronic mandate will be suspended. The debtor bank will advise the creditor (via the creditor bank) that the mandate has been suspended. The creditor needs to interact with his customer (debtor) to determine the cause of the stop payment.
Before any further DebiCheck collections can be processed, the creditor must submit an amendment to the mandate to un-suspend the mandate, and the debtor must electronically approve the un-suspend request.
Whilst a DebiCheck collection can be disputed under certain conditions it must be remembered that, due to the initial collection being validated against the approved electronic mandate, it will more difficult for the debtor to dispute the DebiCheck collection.
Collections disputed within 40 days of the debit will be reversed immediately if the dispute is found to be legitimate. Disputes over 40 days can have a processing delay of two days.
Disputes are not allowed after 12 months from the action date.