DEBIT ORDERS

PASA offers some insight on how to manage your debit orders during the Covid-19 lockdown.

Debit Order Covid 19 Consumer Infographic

Our Expert Analysis on Combatting Debit Order Abuse:
This paper positions the work of the mavericks, mobilisers and mentors that set out to thoroughly understand and solve some of the pain points in the debit order sphere. The journey thus far required full transparency and accountability of various stakeholders as well as a holistic, integrated and cross-sectoral approach. The outcomes and impact of these changemakers lead to the creation and implementation of agile and responsive practices that consistently mitigate criminal activities, while minimising problematic consumer behaviour

Changemakers in the National Payment System – the next chapter

This paper positions the work of the mavericks, mobilisers and mentors that set out to thoroughly understand and solve some of the painpoints in the debit order sphere. The journey thus far required full transparency and accountability of various stakeholders as well as a holistic, integrated and cross-sectoral approach. The outcomes and impact of these changemakers lead to the creation and implementation of agile and responsive practices that consistently mitigate criminal activities, while minimising problematic consumer behaviour.

PASA – Combatting Debit Order Abuse

Most consumers agree that debit orders are a convenient way to make payments. But, the debit order system has had a number of challenges over the last couple of years and PASA, with the payments industry, has been working hard to make the system more efficient. Currently, we are busy exploring improved ways to protect you from unauthorized debit orders as well as to help you better understand your rights and obligations regarding debit orders.

Low Value Debits

A debit order collection is a transaction whereby collectors can collect money from a payer’s bank account without the payer having to do anything other than having given such collector approval to do so. Debit order collection are widely used to collect monthly premiums on life and investment policies, mortgage and car payments, medical aid subscriptions, magazine, and TV subscriptions, etc. It provides the payer with a cost effective and very convenient means of making payments.

(Proposed that the term “debit order” be included in the Glossary. Description as per rules to be included as description there : e.g. : (“including debit when used as a noun”) means a mandated payment instruction from the User to a Bank, presented in the form of an electronic record, to collect money from a customer; e.g. insurance premiums, unit trust investments, hire purchase payments, rentals, etc.)

A stop order is an instruction that a payer give to the payer’s bank to make a series of future dated recurring payments, whereas a debit order collection is an instruction that a payer give to a collector to collect payment against the payer’s account.

Characteristic	Stop Order	Debit Order
Type	Credit Push	Debit Pull
Mandate	Held by the issuing / paying bank	Held by the third party beneficiary
Amount	Fixed	Flexible
Item or transaction limit	R 5 million	R 1 000 000

The payer has the right to query any debit order collection that the payer believes was incorrectly debited against the account.

It is recommended that a payer always first approach the collector who has debited the payer’s account, as the agreement to collect funds from the payer’s account is between the payer and the collector. Only if this course of action has proved to be unsuccessful, should the payer approach the payer’s bank.

Payers must contact collectors who are collecting against their accounts to cancel debit order collections as the agreement to collect funds from the payer’s account is between the payers and the collectors.

The granting of a mandate by a payer to a collector constitutes a formal agreement between the payer and the collector to allow the collector to collect money from a payer’s bank account , and the payer would be obliged to honour the agreement in terms of common law principles by doing the following:

Ensure that money is available in the account of the payer to meet the obligation (the payer need to ensure when signing a mandate that it is for a date when there will normally be money in the account)

Payers must make alternative arrangements with collectors, should money not be available in the payer’s account to allow for the debit order collection as per the agreement between the payer and the collector.

The payer’s bank will be able to tell the payer who debited the payer’s account. All collectors are required to register a unique code (the code that will show on your bank statement together with the amount of the debit order collection) . From this unique code, the bank of the payer can determine the full description of the collector that collected the debit order collection against the payer’s account.

An unpaid debit order collection is a debit order collection which has successfully gone through the system, however not completed due to a variety of reasons, such as insufficient funds, account closed, account blocked, etc.

Payers must ensure that payers have sufficient money available at the time that the debit order collection will be processed. The payer must ensure that debit order collections that has expired or are invalid have been cancelled with the collector.