The system that will stop illegal debit orders in South Africa

The Payments Association of South Africa (Pasa) and the Reserve Bank will launch the Authenticated Collections Project in October, which will see only debit orders authorised by consumers be processed by banks.

According to the Power Report in the Sunday Times, the project is one of the “most complex and biggest payment projects” ever undertaken, and will require bank customers to provide “explicit authentication” before their account can be debited.

The project is a year behind schedule, but should provide relief for thousands of South Africans who have their accounts debited without their permission by unscrupulous companies on a monthly basis.

“Last year alone, Pasa shut down 150 small call centres, mainly in Durban, from which dodgy debits were emanating. Unfortunately, these outfits tend to pop up again under new names,” stated the report.

How it will work

“This mandatory authentication will be done in various ways – including in person through a card swipe or through an SMS request from the bank,” stated the report.

Only early debits, known as non-authenticated debit orders, will be affected initially.

“It will eventually roll out to all types of debits, including long-term debit orders.”

The debit order project will come as a relief to consumers who have had money taken off their accounts without their permission, and who were told by banks that it is their responsibility to ensure debit order fraud does not occur on their accounts.

According to a November 2015 report, nearly one million debit order disputes are lodged in SA every month.

The full report is available in the Sunday Times – 7 February 2016 edition.

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