Without DebiCheck Your Business Is Going To The Back Of The Payment Queue.

Will You Still Reach Your Collections Targets?

By Carla van der Vyver

Group Customer Service Manager, PAYM8


Carla started with PAYM8 in 2015 bringing with her 15 years of business management experience developed across a variety of sectors. Carla heads the Client Services team and is specifically passionate about delivering the best possible outcomes and return on investment to her clients.

By Andrew Springate

Chief Executive Officer, PAYM8


Andrew brings a wealth of knowledge and experience to the field of merchant payment solutions. For the past 15 years he has worked with SMME companies where he efficiently met unique organisational and technological constraints to produce significant achievements in financial collections, service delivery and  Internal process improvement.

Without DebiCheck Your Business Is Going To The Back Of The Payment Queue.

Will You Still Reach Your Collections Targets?

From 1 November 2019, South Africa became the first country globally to implement a debit order system where banks request electronic pre-authorization, directly from their clients, for a debit order agreement. It’s called DebiCheck and it was instituted in response to a mandate from the South African Reserve Bank, with the aim of preventing fraudulent debit orders, while also protecting merchants/credit providers from an increase in disputed debit orders. Debicheck will change the payments game by making a customer’s bank the only role player authorised to obtain permission from a client. This completely disrupts the status quo. Currently merchants and credit providers can obtain authorisation themselves, directly with the customer, via paper or voice mandates.

The change will have a profound impact on any business that currently makes use of Non-Authenticated Early Debit Orders (NAEDO) and to a lesser degree those who use Authenticated Early Debit Orders. Both these debit orders sit under the EDO (early debit order) stream. The EDO stream will be replaced by DebiCheck.

Many South African companies are highly reliant on debit orders as a payment channel. Your business is probably one of them. Payments Association of South Africa (PASA) states that 48 million debit orders are processed monthly across all industries, totaling approximately R80 billion in revenue.  There are two broad types of debit orders used – Standard debit orders (EFT Debits) of which 33.5 million are processed monthly and early debit orders (AEDO and NAEDO) with 14.5 million monthly transactions. The difference between these debit orders comes down to when they are processed in a day. Standard debit orders are processed during the ‘late’ window or in the evening, while early debit orders are processed in the early morning. Early debit orders have the added benefit of being able to track a customer’s account for available funds for up to 32 days.

But this EDO stream is set to be disrupted. The DebiCheck stream is going to replace the early debit order from as soon as May 2020. No merchant will be able to collect funds in the early morning window or track a customer’s account without electronic authorisation from the consumer.

Without the DebiCheck system, your company will have to use an EFT based debit order and depending on the industry you are in, this could have serious consequences for your cash flow. Businesses who process debit orders from an ‘unwilling payer” base, will be most at risk. While the intention is that DebiCheck will eventually apply to every debit order going forward, the cancellation of NAEDO early window debit orders in May 2020, will leave external debt collectors, credit providers and many others unable to strike first when a customer’s salary hits their account. The bottom line is that without the DebiCheck system, you will be at the back of the payment queue.

Integrating DebiCheck into your current payment system will require a partner that understands the risks to your cash flow and business goals. It’s why at PAYM8 we have developed the PAYM8 Axis platform. It brings automated intelligence, plus many alternatives to DebiCheck into the process ensuring that while DebiCheck is being onboarded into your recurring payments system, you will have the ability to seamlessly promote your existing NAEDO instructions to DebiCheck instructions. And while the system is in the change-over period, you will be able to automatically ‘fall back’ to the NAEDO, recurring card or other alternative channels, should a client for whatever reason decide not to authorise a DebiCheck mandate. This provides a safety net for your cash flow, while the DebiCheck system is onboarded.

While DebiCheck will add a new step in your sales process and you will have to wait for confirmation of the payers authorisation of the mandate, disputes will be almost impossible as long as you process the debit order exactly in line with the date and value you have loaded when you created the mandate register record. As long as the payment matches the authorisation given to the bank, the payer will not be able to dispute or reverse the payment.

The final decision to ‘accept’ or ‘reject’ a DebiCheck lies with the consumer. Business is soon going to have to be faced with the task of analyzing the risks should they be unable to obtain an approved DebiCheck. What are the alternatives to meeting your collection targets? This collections strategy needs to be carefully analysed in partnership with a payments company that understands that the changeover to DebiCheck could lead to reduced collection rates. If your debit order success rate deteriorates by even 10%, are you ready for the increased collections and arrears, higher provisions and write-offs? What effect will this have on your bottom line?


Another risk that will also need to be considered, where immediate authorisation is required, is if the bank has your client’s correct cellphone number. If any of your clients have failed to update their bank with a new cellphone number, they will not receive the Debicheck authorisation and your company will not be mandated to remove the funds from his or her account. Banks are exploring multiple electronic channels to use to send DebiCheck authorisations including email, bank apps and online banking but for less connected clients SMS or USSD would be the only option.


If you are a business that relies heavily on the early ‘window’ to collect, then now is the time to start considering how your payments strategy is going to adapt. Done right, DebiCheck offers the chance for businesses to enjoy an improved and accurate payment process which reduces reversals of legitimate debit orders and enables consistency in successful collections. With the right payments partner, you’ll be at the front of the payment line. You’ve got less than six months to prepare. Make sure you’re working with payment experts who understand what’s at stake.

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