The South African Reserve Bank (SARB) introduced the Authenticated Collections project, also known as DebiCheck, on 1 May 2021.
DebiCheck is a secure debit order payment system that allows consumers to electronically verify and approve debit orders.
This project forms part of the SARB’s modernisation of the national payment system and seeks to address the increasing levels of abuse in the debit order payment system.
All new and renegotiated early debit order (EDO) mandates will now be originated in the DebiCheck payment system instead of the current system.
“Early debit orders will only be processed through the DebiCheck payment system, while normal debit orders will still be processed later in the day as per current arrangements,” the SARB said.
Before the new system came into place, consumers would provide a mandate to a company to collect money from their bank accounts.
The company would then implement a debit order and could take money from an account without any additional authorisation from the account holder.
Unsurprisingly, many rogue companies implemented debit orders without authorisation and stole millions from South African banking clients.
With the new DebiCheck payment system, a consumer must provide authorisation to their bank to allow a company to take money from their account.
John Anderson, head of schemes and industry payments at Standard Bank, provided details on how the new DebiCheck system works.
“A DebiCheck debit order is one that you confirm, electronically on a once-off basis, at the start of your contract or if amendments are made on your existing contract,” he said.
“Its purpose is for you to confirm the details of the debit order with your bank before it is processed to your bank account.”
The DebiCheck process works as follows:
- Upon setting up a new debit order with a service provider, the bank will send the customer an SMS to approve the new DebiCheck mandate.
- If the details of the contract are correct – like date, amount, and frequency of the debit order – the customer can electronically confirm the debit order mandate.
- Only if the customer confirms the details, will the debit order be processed via the DebiCheck system against their account.
- If the customer rejects the DebiCheck mandate, the debit order will not go through as a DebiCheck.
- Should the customer’s confirmed details differ from the debit order collection request, the bank will not process the collection.
“Confirming your debit order electronically ensures that you are in control of and aware of debit orders being processed to your bank account,” said Anderson.
“It also provides the company the comfort of knowing that you have acknowledged and are aware of these debit orders.”
It further allows the bank to record the debit order information and to check the information before it processes the debit order.
“All of this adds much needed layers of protection to the debit order process,” Anderson said.