Three Peaks has had its ear to the ground over the last year listening to the payment industry chatter around The Authenticated Collections Project.
As a result of the noticeable increase in Debit Order abuse, the South African Reserve Bank (SARB) requested the Payments Association of South Africa (PASA) to create a new payment system to reduce the number of unauthorised debit orders being processed by companies as well as consumer disputes being processed with “no authority to debit.”
Walter Volker, the CEO of PASA says: “Debit Order abuse not only has a significant impact on consumers, but also on the efficiency of the payment system. There are many scenarios where a company processes Debit Orders to a consumer’s bank account without a proper or valid mandate, no mandate or with an expired one. In other instances, consumers request their banks to return Debit Orders which have already been paid even when a valid mandate is in place.”
The AC project will implement a process whereby consumers will electronically confirm to their bank that they agree to the details of the specific Debit Order in much the same way that the One-Time Pin (OTP) works. Once you have authenticated your Debit Order, the bank will check the Debit Order payment instruction from the company/user against your authenticated mandate to ensure that the debit is in line with what you agreed to, prior to processing.
In conjunction with Authenticated Collections, additional measurements will be enforced to eliminate fraud or unauthorised collections:
- A debit order without a mandate after a transaction is processed and disputed by the account holder will contribute to a penalty to be paid by the applicable creditor.
- Organisations monitored and found in breach, will be subjected to a full audit.
- Organisations processing debit orders without adequate mandates will be blocked from debit order systems.
The SARB is aiming for implementation of ACs from 30 September 2016 and allowing approximately 2 years to complete the implementation. Three Peaks welcomes the initiative as it will go a long way towards ridding the system of unscrupulous debtors and creditors and ultimately making for a far more efficient system.