Absa, one of South Africa’s largest banks, has launched what it claims is a first-to-market online tool to help customers to reverse unauthorised debit orders.
The unauthorised debit order can be reversed or disputed within 40 days after the debit or thereafter, the bank said, noting that customers will receive the money back in their account instantly.
The bank will also stop debit orders from going off their account in future.
“Unauthorised debit orders have become a huge challenge for all banks. Customers now have the ability to view and stop debit orders quickly and easily using online banking,” said Marius de la Rey, chief executive, customer channels & distribution, Barclays Africa Retail and Business Banking.
According to data from the Payments Association of South Africa (PASA), South African banks collectively process approximately 31 million debit orders every month, of which around 120,000 are disputed.
Many of these disputes are due to fraud and invalid mandates and the media regularly reports on complaints from customers who have been fleeced by way of unauthorised or fraudulent debit orders.
PASA is working hard to crack down on this scourge, and since November 2013, about 300 rogue users have been taken off the debit order system, meaning they cannot have debit orders processed by any bank.
Absa said that the use of this functionality is free for all customers.
The bank said that in line with the TCF (Treating Customers Fairly) principles, customers have a right to dispute an incorrectly concluded transaction and stop future transactions.
“Such debit orders can be reversed or disputed within 40 days after the debit or thereafter while an instruction to cancel a debit order remains on Absa’s system for a period of six months. After this, the service provider may again attempt to debit the account and it will be processed,” said de la Rey.
Absa warned customers against cancelling debit orders in an attempt to manage their cash flow.
“Many consumers unjustly dispute debit orders when they are short of cash or run into financial difficulties. It is important for customers to note that, if they use the dispute process to manage cash flow, they run the risk of losing out on policy pay-outs when they claim, due to inconsistent payment history.
“Similarly, a high dispute ratio in a person’s account will lead to that person’s risk profile being negatively impacted,” said de la Rey.
PASA facts on debit orders
- Approximately 31 million debit orders are processed each month
- Around 1.2 million (10%) of this are unpaid due to lack of funds or invalid accounts.
- Around 176 000 (0.6%) are disputed – for various reasons, not all fraud.
- The NAEDO (non-authenticated collections) system processes around 14 million debit orders per month of which 4 million (29%) are rejected and 4-6% are disputed for various reasons, including cash-flow management.
- The AEDO system (early debit order where a card pin authentication is required from the account holder before the debit order will be processed by the bank) processes around 3.5 million debit orders with 29% rejected but no disputes.