Chamber of Commerce urges banks to lure small traders

Chamber of Commerce urges banks to lure small traders

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The banking industry should make a greater effort to bring small business enterprises into the banking system so that they could take advantage of systems like debit orders and electronic funds transfer mechanisms to settle accounts, rather than relying on cash payments,the South African Chamber of Commerce and Industry (SACCI) said in a statement on Tuesday.

“It is vital that banking services be made available to as many traders as possible so that they can grow their enterprises by making use of the wide variety of services offered by banks,” said the SACCI’s Peggy Drodske.

Drodske said banks were not making it easy for individual traders or small and informal traders to open bank accounts, and the issue of tax was also important because these businesses needed to be brought into the taxation net.

Fred Steffers, MD of SmartCollect, one of the largest debit order processing companies in South Africa, said Eskom’s load shedding programme and slow growth in the economy had hit small and medium enterprises particularly hard.

“Every time the lights go out, most small traders have to shut their doors because they can’t afford the luxury of generators like their bigger counterparts,” said Steffers

“Debit orders could play a major role in helping SMEs to keep their doors open because it would immediately reduce their debt load and ease the cash-flow crisis that many of them experience every month.”

Steffer said that while high income earners relied almost exclusively on debit orders to settle recurring debts, middle and lower income earners were still largely locked into a cash-based payment system.

“This is risky because it means that they often have to walk around with large sums of cash on them. It is also wastes valuable time because it means that they have to take time off from work to pay for a funeral policy or some other form of recurring expense,” Steffers said.

“Debit orders are by far the most cost effective and safest way to make payments,” he said.

Of the 60 million debit orders processed monthly by payments systems companies, less than one percent were fraudulent or “problematic” in any way, Steffer said.

Even in cases where fraud did occur, it was easily remedied because consumers were able to cancel these quickly and easily.

Steffer said: “Contrary to popular belief – and as some of the banks would have their clients believe – a fraudulent debit order does not have to be cancelled or revoked with the call centre that generated it. It is, in fact, incumbent upon the consumer’s bank to cancel and reverse the debit order on a no questions asked basis provided it is done within 30 days of the debit order appearing on the client’s bank statement.”

If the consumer became aware of the fraud after the 30-day window, it was incumbent upon the bank to verify that the company that processed the debit order had a valid mandate from the consumer, and if they could not provide a mandate, the transaction had to be reversed and the client reimbursed, Steffer said.

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