On 1 November this year, South Africa welcomed the introduction of the DebiCheck payment system to tighten measures against debit order fraud and abuse. But as with many new policies and procedures, there has been adoption, but it is far from universal.
According to Andrew Springate, CEO of PAYM8, a technology and financial gateway service provider, “A lot of information around why DebiCheck has been introduced has been shared since 2018, but there’s still a great deal to be done by all parties to drive widescale adoption and avoid the inevitable headaches that come with not having DebiCheck in place.”
DebiCheck was instituted as a response to a mandate from the South African Reserve Bank to prevent fraudulent debit orders from unscrupulous organisations, while equally protecting merchants and credit providers from debtors needlessly disputing debit orders as a means of managing their cash flow.
Springate explains that non-compliance will land those trying to collect new early-mandate debit orders without a DebiCheck verified mandate in trouble: “The Reserve Bank has made non-compliance a criminal offence, and banks that do not comply with this directive could be prosecuted and expelled from participating in the national payment system.”
“Furthermore, merchants who have not gotten on board with the DebiCheck system yet should be planning for reduced collection rates, arrears and higher provisions for write-offs, which is not a position anyone wants to be in now,” he adds.
Early debit orders are collected shortly after midnight on the debit order collection date. These new and renegotiated early debit orders will need to be verified using DebiCheck or fall into the EFT Debit category. Unfortunately, disputing a debit order or collecting from an account with depleted funds results in an administrative nightmare.
Springate explains, “While it is technically too late to be compliant – as DebiCheck is already in place – it is not too late to get the systems in order for organisations that rely on debit order processing to collect funds. Solutions can still be implemented efficiently with guidance from a trusted partner that knows the payments landscape.”
As a long-standing authority in the payments industry, PAYM8 has been a part of the DebiCheck process since its conception. As a result, it has been at the forefront of making DebiCheck migration a seamless process for its customers.
“We understand that, only now, after the industry has moved onto DebiCheck and the first batch of monthly debit orders have run that many creditors and organisations have realised that the system has changed and they need to get on board, update their technology and keep educating their sales teams. And starting now is better than in a few months when finances are really in a crunch,” concludes Springate.