Why is DebiCheck being introduced?
Over the last few years, there has been an increase of debit orders being processed to bank accounts without permission (a mandate) from consumers. On the other hand, consumers who dispute debit orders that do have valid mandates have also increased, which has become of significant concern for banks and companies. As a result, the South African Reserve Bank (SARB) asked the Payments Association of South Africa (PASA), which includes the South African banks, to find a solution. DebiCheck was launched in 2017 and continues to be rolled out. As per the SARB Directive, as of 1 May 2021 no new, extended or renegotiated AEDO or NAEDO collection agreements may be concluded within the debit order system; all other debit streams continue as per the Directive. As of 31 October 2021, AEDO and NAEDO will be sunsetted, with DebiCheck and EFT as the only available alternatives.
What are the benefits to me, the User?
If you are a User wanting to collect money in the Early Processing Window, you will be required to participate in the new system. Being a DebiCheck User means that you will have the benefit of receiving confirmation that mandates, already authorised by your customer, are being stored by his / her bank. This will result in less disputes with “no authority to debit” and provide you with improved protection against consumers abusing the system for cash management purposes. The new system will also provide the opportunity to introduce a non-face-to-face facility for authentication and thus improve flexibility as compared to the current Authenticated Early Debit Orders (AEDO) option.
What do I have to do from a technology perspective? What actions are required to implement DebiCheck?
Any User who wants to make use of the DebiCheck system as a collection method will have to engage with their sponsoring bank to obtain the User specifications. These specifications must be used to develop the processes and connectivity to be able to utilise some or all of the available authentication methods, submit payment files for processing, receive response files and effect amendments to the mandated details stored at the consumer’s bank. There are also System Operators who can assist to make the transition painless – please check with your bank. Depending on your type of business, authentication technologies and processes are available for face-to-face and / or remote interaction, and batch or real-time processing.
How much will this cost me?
There will be internal development cost to implement the new system and processes, which you will have to calculate and manage based on the specifications supplied by your sponsoring bank. For costing between your company and your bank and / or System Operator (if applicable), you will have to consult with the relevant entity.
Is it mandatory to participate?
If you want to collect in the Early Processing Window, you will have to participate as a DebiCheck User. Alternatively, you may choose to do your collections in the normal EFT debit order run.
How do I register to become part of DebiCheck?
Contact your sponsoring bank to register for the DebiCheck service. If you currently process Authenticated Early Debit Orders (AEDO) or Non-Authenticated Early Debit Orders (NAEDO) transactions, do not assume that you will automatically have access to the DebiCheck system. The banks may apply different criteria. Check with your corporate banker.
Will I receive technical support?
Different Users will require different levels of technical support. Your bank will supply the specifications, but if your IT department needs help, there are a number of System Operators who are geared to assist at your required skill level. Your bank will have a list of preferred System Operators and Third Party Payment Providers, or you may reference the Payment Association of South PASA website (www.pasa.org.za) for a list of authorised System Operators.
How will we be relaying the messages publically to support consumer education?
The industry has created a DebiCheck Toolkit. The toolkit includes standard messages that both banks and Users should use when communicating to consumers. There is also pre-designed (yet customisable) material, such as posters, flyers, e-mailers and brochures, available. Banks will create internal marketing and educational material for the benefit of their customers. Using the scripts and pre-designed artefacts, you may also create your own material, within the boundaries of the industry toolkit. You can contact your User association or your sponsoring bank for the material.
What support and rights do I have?
As a User, you have the support of your sponsoring bank and System Operator, if applicable. If you have any additional questions that you cannot find answers to in the available correspondence, your first point of contact should be your sponsoring bank. You have the right to participate in the new DebiCheck system if you implement the changes and meet the requirements and rules for participation.
As a User, how do I manage education and value to my customers?
Discuss your marketing ideas with your bank and get approval for the message you want to communicate – especially in the initial stages where there may be uncertainty and conflicting information. All communication must consider the industry DebiCheck communication guidelines.
Is there a platform that I can capture or integrate with? Or do I need to develop my own?
Your Bank will provide the specifications and description of the process, but generally you will have to incorporate the changes into your own systems. Users who currently make use of systems supplied by System Operators or Third Party Payment Providers will receive updates from these entities in due course.
Is there a way of simplifying this process while still being compliant?
Right now, unfortunately not. The industry needs to implement and run the system for a few months to see what works well and where improvement is required. Once there is a better understanding, there may be changes introduced to simplify the process, if needed.
What will happen to Authenticated Early Debit Orders (AEDO) and Non-Authenticated Early Debit Orders (NAEDO) once DebiCheck is introduced?
AEDO and NAEDO will continue to run, but will be phased out over time. No New or Re-negotiated AEDO and NAEDO mandates will be allowed after 1 May 2021 and from 1 November 2021, only DebiCheck debit orders will be allowed for processing in the early processing window. For more information regarding the project approach and timelines, please speak to your sponsoring bank or user association.
What happens if my company is not ready to move across onto the new system? Can my company continue to use Non-Authenticated Early Debit Orders (NAEDO) for collections?
No New or Re-negotiated AEDO and NAEDO mandates will be allowed after 1 May 2021. You can still process NAEDO and AEDO collections on mandates that were created prior to 1 May 2021. As of 1 November 2021, AEDO and NAEDO will be decommissioned. Only DebiCheck debit orders will be allowed for processing in the first priority of the early processing window. EFT will still be an available option for processing, however, will only collect in the later hours of the day. For more information regarding the project approach and timelines please speak to your sponsoring bank or user association.
DebiCheck for Business - Getting Ready
As a user of AEDO and/or NAEDO, what do I need to know about the sunsetting of AEDO and NAEDO?
In accordance with the South African Reserve Bank’s second Amended Directive 1 of 2017, authenticated early debit orders (AEDO) and non-authenticated early debit orders (NAEDO) will be sunset on 31 October 2021. In this regard, AEDO and NAEDO payment instructions will not be permitted with effect from 1 November 2021. DebiCheck and EFT payment instructions will continue to process.
The following must be considered as a result of the sunsetting of AEDO and NAEDO:
– The last day of processing AEDO and/or NAEDO transactions will end on Sunday, 31 October 2021.
– Since the end date falls on a Sunday, all requirements would need to be done prior to this if needed, considering six or seven days processing for banks.
– All AEDO and NAEDO migrations must have been completed by 31 October 2021.
– Tracking on these transactions will continue after 31 October 2021, until the end of the tracking period indicated in the payment instruction.
– Disputes handling, tracking of payment instructions, stop payment instructions, unpaid responses and recalls will still be permitted after 31 October 2021 as indicated in the BankservAfrica notice.
Should you require additional information regarding the sunsetting of AEDO and NAEDO debit orders, kindly contact your sponsoring bank or system operator.
What will happen if the consumer suspends their DebiCheck debit order?
In our endeavour to address ongoing debit order abuse through DebiCheck, the opportunity to dispute a debit order has generally proven to be effective. However, some payers make use of the opportunity to suspend a debit order in order to free up funds, despite the fact that the debit order is valid. This scenario may result in unintended consequences.
Process of suspending a DebiCheck debit order
Through this process, the payer would usually go directly to their bank to dispute a debit order, resulting in a possible suspension of future collections. This could unintentionally have a negative effect on the underlying contract concluded with the creditor.
User associations can greatly assist in educating the payer of the potential risk of disputing a debit order in order to free up funds.