When South Africa became the first country in the world to launch Authenticated Collections (Debicheck), replacing EDO (AEDO & NAEDO) with DebiCheck in 2021, consumers and merchants breathed a collective sigh of relief. Now Registered Mandate Services (RMS) promises even more benefits for the entire payments ecosystem, says Andrew Springate, CEO of tech and financial gateway service provider PAYM8.

Prior to DebiCheck, both merchants and consumers were in near uproar that banks, the custodians of their money, weren’t securing debit orders when such rampant abuse of EFTs was being experienced by the industry.

Thanks to DebiCheck consumers now have the ability to pre-authorise debit orders electronically.

Merchants, on the other hand, now enjoy greater protection from debtors needlessly disputing debit orders. With DebiCheck in place, it’s much harder for unscrupulous individuals to dispute debit order approval as it takes place in digital format prior to the debit being processed.

But, as with any new system, there have been some growing pains. Though DebiCheck prevents fraudulent debit orders, in some cases it has also prevented legitimate companies from collecting agreed-upon fees due to consumers not approving the orders timeously.

Enter RMS

Registered Mandate Services (RMS) is an interim measure that addresses poor consumer responses to DebiCheck mandates.

Should a consumer not authorise a debit order within the allocated time, the merchant providing they have a mandate, can convert the transaction to an RMS transaction to collect the debit order – thereby improving the cashflow issues experienced during this transition period while merchants and consumers get used to DebiCheck technology.

When a merchant receives a “no response” or “NSRP” message on a DebiCheck mandate, they can convert it to an RMS transaction. The creditor bank will then send a request to the debtor bank to approve the transaction, without the consumer having to do so.

Here’s what merchants need to know about RMS:

• You have ten working days from the NSRP date to initiate the RMS request.
• Outright DebiCheck mandate rejections will not be eligible for the RMS – only those with a ‘no response’ status.
• The consumer will not be required to re-authenticate the RMS transaction.
• There is still the risk of an RMS transaction being reversed, as consumers may dispute it along NAEDO rules.

What consumers should know:

• Ignoring an authentication request on a legitimate DebiCheck mandate is not a free pass on a debit order – if you agree to a contract that requires a debit order, you will still be legally bound to pay it.
• Should you not authorise it, merchants can now convert it to an RMS transaction to complete the debit order. If there are grounds for a dispute, you can however still dispute an RMS transaction within 40 days.

It’s time for merchants to update their systems

Since DebiCheck’s implementation, merchants are no longer be able to get debit order authorisation directly from their customers. Despite some maturity challenges, DebiCheck is here to stay. If you haven’t yet updated your systems, you need to urgently do so. And, now, RMS will protect you against the hiccups some merchants have been experiencing during this transition phase.

PAYM8 is ready to help merchants update their systems to drive the wide-scale adoption necessary for a smooth transition. Here are just some of the benefits you’ll experience:

·         Instantaneous authorisation at POP using a TT3 transaction. This ensures a continuous sales cycle as the debtor has the ability to authorise the debit before leaving the store. The TT3 transaction is for face-to-face requirements.

·         Increased consumer trust: The customer can agree to a debit order without fear of incorrect debit amounts, incorrect processing dates, or incorrect terms. This now is controlled by the debtor’s bank with the customer’s interest protected by their bank.

·         Automatic conversions: PAYM8 gives you the ability to automatically convert your timed out DebiCheck mandate request to a RMS mandate. This ensures that you will still be able to collect within the early processing window.