DebiCheck, a service enabling consumers to authenticate a new debit order before it is processed for the first time, is set to be trialed this year.
CEO at Payments Association of South Africa (Pasa), Walter Volker, told Radio 702 that DebiCheck is currently in a testing phase and is expected to be piloted before the end of 2017.
He said that the project would then ramp up in the early part of 2018. He explained that, because it is a world-first, the process and technology is not simple and has therefore taken time to develop – two years already.
DebiCheck aims to protect consumers from rogue debit orders, which has become a rising concern in South Africa. The Ombudsman for Banking Services said in the fourth quarter of last year that disputed debit order complaints are up 54% over the past year.
Data from the Payments Association of South Africa (Pasa) revealed that approximately 31 million debit orders are processed countrywide each month, of which 1.2 million are unpaid while 170,000 are disputed.
Pasa said that almost 14 million non-authenticated early debt orders are processed each month, four million of which are unsuccessful, with 600,000 disputed.
The new system will prevent unauthorised debit orders from being processed without the account holder’s consent, as opposed to canceling an unauthorised debit order once it has gone through – which is currently the case.
The DebiCheck system will also protect banks, with the report stating that more consumers are reversing legitimate debit orders when money becomes tight.
The Sunday Times reported that following the launch of app-based debit order dispute mechanisms by local banks, consumers are flagging debit orders to avoid payments.
The DebiCheck system will allow banks to see which debit orders have been authorised and then spot fake disputes.