DebiCheck: All About SA’s New Debit Order System

Debit orders are among the most popular ways of paying bills in South Africa. However, over the past few years, debit order abuse has become a major issue, both for companies as well as consumers. Customers are disputing previously agreed upon contracts, while fraudulent companies are tricking consumers into debit order applications.

To combat this issue, the South African Reserve Bank (SARs) and the Payments Association of South Africa (PASA) have introduced a new payment initiative called DebiCheck. The hope is that this new initiative will protect South African consumers and companies against fraudulent and incorrect debit orders. DebiCheck was first introduced in 2019 and is the first debit order system that requires banks to request electronic authorisation from their clients.

What is DebiCheck?

DebiCheck is a specific type of debit order that requires you to electronically confirm debit order information with your bank before your account is debited. Authorising your debit order through your bank means the bank knows what you have agreed to and will be able to manage your debit orders within the terms of your signed agreement. This significantly reduces your risk of being the victim of debit order fraud.

Why do we need DebiCheck?

Over the past few years, more and more people are falling victim to debit order abuse and fraud. There has been an increase in debit orders being processed to consumers’ bank accounts without their consent or knowledge and, on the other hand, consumers are disputing debit order payments that have previously been agreed upon. PASA, along with the South African Reserve Bank, instituted DebiCheck as a way of countering the rise in debit order fraud by ensuring all parties involved in issuing the debit order — consumer, bank and third party — authorise and agree upon the stipulated terms of the contract so that nothing can be disputed or abused.

How does DebiCheck work?

DebiCheck is a simple process and is done entirely remotely through your bank. Currently, the DebiCheck service is offered by:

ABSA, First National Bank, African Bank, groBank, Bidvest Bank, Nedbank, Capitec, Standard Bank, Finbond, ubank.

How it works:

Let’s say for example you have recently signed up with a new internet service provider and signed a contract and need to pay monthly instalments via debit order.

Below is a step-by-step breakdown of how you would get started with DebiCheck:

1. You’ll receive an SMS from your bank to approve the new DebiCheck mandate (contract).

2. If all is correct, you will confirm the details supplied by the internet company.

3. Once you accept, your debit order will be processed.

4. Your bank will run monthly checks on your debit order and if anything doesn’t match the initial debit order forms and contract, your order will not be processed.

What is a DebiCheck Mandate?

A bank mandate is the authority that allows a third party to withdraw a certain amount from your bank account at a given time.

A DebiCheck mandate is only processed once you and the bank have approved the mandate request from the third party. The following information is provided and must be approved before any DebiCheck mandate is authorised:

• The company/person debiting your account.
• The amount that will be debited each month.
• The date that your account will be debited every month.

Unlike other electronic mandates, DebiCheck mandates are issued by the bank, upon request of the third party, and are only approved once the bank has received confirmation that you’ve authorised all of the debit order details.

Why DebiCheck over other forms of debit order?

In addition to DebiCheck, South Africans have access to EFT debit orders as well as AEDO (Authenticated Early Debit Order) services.

EFT Debit Orders allow a third party to collect money from your bank account simply by producing a written, verbal or electronic approval from the customer. The bank processes the debit order against instructions provided by the third party, which usually include the signed approval from the customer. Unlike DebiCheck, EFT debit orders run the risk of debit order abuse, because your bank largely relies on information provided by the third party, not you as a customer. Sharing your debit order information with your bank will allow them to know what you have signed up for so that they can flag any fraudulent behaviour if they see debited payments outside of your stipulated agreements.

The AEDO service enables the account holder to approve a future dated early debit order through the use of their debit card and PIN. The AEDO service allows consumers to electronically authorise future dated deductions by swiping their card at the point of sale and entering their PIN. AEDO authentication can only take place at a physical terminal which makes them largely inaccessible, whereas DebiCheck only requires your current mobile number and for you to have access to your online banking platform.

Benefits of DebiCheck

• Reduces disputes regarding debit orders.
• Eliminates the possibility of fraudulent debit orders.
• Provides legal recourse if either customer or third party do not meet the terms of the authorised agreement.
• Monthly bank checks before debit orders are processed.
• Quick and cost-effective.

DebiCheck and Debt Review

DebiCheck has proven to be widely successful for both debt collection companies as well as consumers in debt review. The authorisation process protects debt collectors from consumers who dispute approved debit orders, and it also protects consumers from fraudulent loan sharks.

According to Alain Le Roux, Debt Counselling Expert at Cyber Finance; “DebiCheck is the way of the future as it protects both customers and debtors against fraudulent debit order behaviour.” 

All debt review debit orders will soon change over to DebiCheck to ensure compliance and security for both consumers and credit providers. DebiCheck will soon be the preferred platform for all debit orders, nationwide.

Cyber Finance is committed to providing consumers with the best advice and debt counselling services that will help them gain financial freedom. Book a free consultation with one of our Cyber Finance debt specialists and find out how you can protect yourself with DebiCheck, today.