Debit order reversal

Absa customers can now personally reverse unauthorised debit orders any time via online banking as part of a drive by the bank to end significant levels of debit order abuse.

“It is, therefore, important that clients check their statements regularly for any fraudulent debits, which in most cases are very small amounts that can easily be missed,” says Marius de la Rey, chief executive of customer channels and distribution at Absa.

Cheats beware

Absa has made Business headlines more than once as a result of illegal or unauthorised debit orders. Other retail banks are reportedly also reconsidering these processes in favour of digital channels. In response, Absa is enabling customers to reverse these orders online and have their money returned instantly if they reverse a debit order that has taken place within the last 40 days.

They can also stop future debit orders. Such an instruction – to cancel a debit order – remains on Absa’s system for only six months, after which time the service provider may again debit the account.

“For disputes lodged after 40 days, Absa cannot guarantee compensation and customers cannot hold the bank liable. Absa will also not refund the customer immediately,” says De la Rey.

Although it may be true that banks can’t be expected to monitor every single debit order, their processes to reverse unauthorised payments are fairly cumbersome.

According to data from the Payments Association of South Africa (Pasa), South African banks collectively process about 31 million debit orders every month (valued at more than R72 billion on average per month), of which about 176 000 (0.6%) are disputed for various reasons, including fraud.

This number skyrockets when it comes to non-authenticated early debit orders (Naedo), which constitute an additional 14 million debit orders and where disputes average around 4.3% to 6%, according to Pasa CEO Walter Volker.

According to Pasa, Naedo has enabled particularly low-income consumers to access microcredit, but has also resulted in a “tenfold increase of disputes as compared to traditional debit orders”.

Cracking down

In response, Pasa initiated the Authenticated Collections (AC) project last year, which will effectively do away with Naedos. “Almost all the banks are on track for the implementation of AC by the deadline at the end of September 2016, including Absa,” said Volker.

On March 1 this year, Pasa implemented a fines system for originators of unauthorised debit orders – up to R1 000 per debit order.