Debit order Source: Google Images

In December 2018, a number of South Africans had been hit by a ‘mysterious R99 debit order’.

While the full extent of the scam is not known, some estimates indicate that as many as 750,000 bank accounts were hit by the scam.

In a statement released by the Payments Association of South Africa (Pasa), the association acknowledged the problem and said that it was working alongside South Africa’s various banks, associations and the South African Reserve Bank on steps to address it.


New system

According to Pasa CEO, Walter Volker, no bank was immune to the so-called R99 scam and other unauthorised debit orders.

“This is not just a problem involving one bank, one company or one scam.

“It is an industry-wide problem and Pasa is working with all the banks to improve the safety of the system, both for consumers and for companies,” he said.

Volker added that Pasa has been working with the banking industry since 2013 to implement a wide-reaching and complex system called DebiCheck – the first of its kind anywhere in the world.

The initial phase went live on 1 August 2018 by which time all 11 participating banks had implemented DebiCheck operationally, he said.

“Right now, user companies are busy implementing the systems and introducing the new business processes that are necessary to fully utilise DebiCheck.

“Thousands of user companies, from large corporates to small business, will be using the system – so we need to ensure it remains stable and that consumers are not adversely affected.”

With DebiCheck, banks will require customers to electronically confirm debit order information with them directly at the start of a new contract with a user, before any collection can take place – thus ensuring that both consumers and their banks know precisely what should be debited from their bank account, Volker said.

Once the consumer has authorised the electronic mandate, it will be stored on their bank’s mandates database and can be verified or monitored at any time.


Roll-out

In its initial phase, Volker said that only consumers dealing with companies that have implemented DebiCheck will be required to confirm their debit order information electronically.

“Although the system is working already, it will take time for all DebiCheck users to ramp up their usage of the system,” he said.

“This number will grow over time, and the aim ultimately is to eradicate any and all unauthorised debit orders, through a combination of DebiCheck and other, more general debit order abuse measures.”

He added that the scale and complexity of the system means that it has taken a great deal of work and time to implement.

“As of August 2018 the system is in place and in use, and companies are being added to the system all the time, he said.

“New DebiCheck debit order customers are already receiving confirmation requests from their banks, but there is still work going on to mature the systems and to fully implement all functionalities required by users and banks.”

Volker added that the Reserve Bank recently granted a 12-month extension (until October 2020) to fully implement DebiCheck.

“This only affects the final date by which the old systems will be switched off. Nevertheless, says Volker, “The eleven banks participating in DebiCheck are committed to the process and still aim to have most companies on the system this year.

“These additional 12 months will also be used to mature the system and to phase out old contracts and systems,” he said.