Skip to main content

Here’s the plan to fight debit order fraud in SA

| Economic factors

The Payments Association of South Africa says it has a plan to take on unauthorised debit orders in the country, and fine the companies responsible.

Speaking to TimesLive, the group said that it will implement a system which will fine companies or groups that process debit orders R1,000 for every transaction that is not authorised by an account holder.

The system will take a statistical sample of debit orders processed and measure how many transactions were unauthorised. The company will then be fined according to that scale.

As an example, Pasa said that if 80% of the transactions in the sample are found to be unauthorised, the company will be fined R1,000 for each transaction making up 80% of its database.

The group is developing this “scientific method” so that its process can stand up in court, if challenged.

Pasa is also working with local banks to implement the Authenticated Collections Project, which will see banks sending electronic notifications to customers informing customers that they are in business with certain companies.

All new early debit orders must be authenticated electronically as from 1 October 2016, it said.

Debit order fraud in South Africa is a big problem, compounded by the onerous process involved with identifying and reversing the orders with local banks.

Until the new systems are in place, it is up to banking clients to identify and reverse false debit orders with their bank. The transactions are typically under R100 – as to avoid notifying banking clients – and any company can process the transactions with very few details needed.

According to Pasa, there are currently 33 million “normal” debit orders to the value of R61 billion processed each month in South Africa.

Additionally, 14 million Non-Authenticated Early Debit Orders (NAEDO) and 1 million Authenticated Early Debit Order (AEDO) transactions are processed early.

The group said that about 8% (1.12 million) of all NAEDO transactions are disputed.

Pin It

Related Articles

South Africans are resilient people who are always ready to seek solutions for problems, even if the trials they face are caused by events that are beyond their control. An empowering example of this approach to life is the use of grocery stokvels...
In response to rising food costs, The SPAR Group offers practical tips for beating food inflation through savvy shopping and creative cooking.
By: Myles Illidge – MyBroadband South Africa’s Road Accident Fund (RAF) tax and General Fuel Levy (GFL) add between R272 and R483 to the price of a tank of fuel, depending on the size of your car’s tank.
By: Shaun Jacobs – Daily Investor Major changes are coming to VAT in South Africa, with the government looking to expand the range of food items exempt from the tax. 
By: Hanno Labuschagne - MyBroadband An anticipated strengthening of the rand and slipping global oil prices could result in lower petrol prices at the pumps next month.