New, easy on­line way to re­verse dodgy debit or­ders

Absa is the first bank to of­fer a quick way im­me­di­ately to re­verse a ques­tion­able debit or­der on your ac­count. Lor­raine Kear­ney re­ports

Weekend Argus (Saturday Edition) - - GOODPOSTER -

Your bank will al­low you to query or stop a debit or­der on your ac­count, but Absa has gone a step fur­ther by an­nounc­ing that its cus­tomers can now re­verse unau­tho­rised debit or­ders on­line, and the money will land back in their ac­counts im­me­di­ately. The bank is the first to of­fer the ser­vice, but the other big banks are ex­plor­ing sim­i­lar ser­vices.

An unau­tho­rised debit or­der is one for which you have not given your per­mis­sion to the busi­ness con­cerned to take money off your ac­count; au­tho­rised debit or­ders are ones for which you have signed up.

“Unau­tho­rised debit or­ders have be­come a huge chal­lenge for all banks,” Mar­ius de la Rey, the chief ex­ec­u­tive, cus­tomer chan­nels and dis­tri­bu­tion, Bar­clays Africa Re­tail and Busi­ness Bank­ing, says. “Cus­tomers have the abil­ity to view and stop debit or­ders quickly and eas­ily us­ing on­line bank­ing and now can also per­son­ally re­verse unau­tho­rised debit or­ders at any time by log­ging on to Absa On­line.”

South African banks col­lec­tively process about 56 mil­lion debit or­ders a month, says Wal­ter Volker, the chief ex­ec­u­tive of the Pay­ments As­so­ci­a­tion of South Africa (Pasa), which man­ages pay­ment sys­tems in South Africa. “Close to a mil­lion in­ter-bank debit or­ders, in­clud­ing non-au­then­ti­cated early debit or­ders – are dis­puted each month. The dis­pute ra­tio for non- au­then­ti­cated debit or­ders is be­tween 4.5 and six per­cent,” he says.

Many dis­puted trans­ac­tions are fraud­u­lent. Pasa is work­ing to stop this ac­tiv­ity; 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.

The Absa tool is “in the in­ter­ests of con­sumer pro­tec­tion and cus­tomer ser­vice”, Volker says. “It has made more ac­ces­si­ble what you can do in the branch any­way.” The bank con­sulted with the as­so­ci­a­tion in de­sign­ing its tool, which is “within the am­bit of our rules”, he adds.

Absa says that, in line with the Treat­ing Cus­tomers Fairly prin­ci­ples, cus­tomers have a right to dis­pute an in­cor­rectly con­cluded trans­ac­tion and to stop fu­ture trans­ac­tions.

With its on­line tool, Absa now al­lows you to re­verse or dis­pute an unau­tho­rised debit or­der within 40 days. You will re­ceive the money back in your ac­count in­stantly (see “How Absa’s tool works”).

The bank will also stop debit or­ders from the same source from go­ing off your ac­count in the fu­ture.

But the onus is on bank cus­tomers to check their state­ments reg­u­larly for any unau­tho­rised or fraud­u­lent deb­its. Banks warn that in most cases, th­ese amounts are very small and can eas­ily be missed.

Some peo­ple stop valid debit or­ders as a way of man­ag­ing their cash flow. De la Rey cau­tions Absa cus­tomers against us­ing its on­line tool to do this.

“Many con­sumers un­justly dis­pute debit or­ders when they are short of cash or run into financial dif­fi­cul­ties,” he says. “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, for ex­am­ple, [in­sur­ance] pol­icy pay-outs when they claim, due to an in­con­sis­tent pay­ment his­tory. Sim­i­larly, a high dis­pute ra­tio in a per­son’s ac­count will lead to that per­son’s risk pro­file be­ing neg­a­tively af­fected.”

Volker echoes th­ese sen­ti­ments, say­ing you may not stop a le­git­i­mate debit or­der, al­though he ad­mits that peo­ple stop debit or­ders to man­age their cash flow “quite ex­ten­sively, prob­a­bly be­cause con­sumers are un­der in­creas­ing financial pres­sure”. It is a big con­cern with the new tool. “It is sad that con­sumers do abuse a sys­tem that is very ef­fi­cient,” Volker says.


Absa is just the first to step into the wa­ters. Capitec will of­fer some­thing sim­i­lar soon.

“Capitec Bank will have the same easy-dis­pute op­tion for con­sumers in the next few weeks. The dif­fer­ence in our ap­proach and that of­fered by oth­ers is the way clients will ac­cess the easy- dis­pute pro­ce­dure,” spokesman Charl Nel says. “We be­lieve that only a small por­tion of the pop­u­la­tion has ac­cess to desk­top com­put­ers and in­ter­net bank­ing. Our ap­proach will be to use more ac­ces­si­ble tech­nol­ogy, al­low­ing the con­sumer to eas­ily dis­pute an unau­tho­rised debit or­der on their ac­count.”

Stan­dard Bank also says it has plans to en­able its cus­tomers to re­verse unau­tho­rised debit or­ders via on­line and mobile chan­nels.

Stan­dard Bank points out, though, that it has no con­trol over the debit or­der sys­tem. It “merely acts as a pay­ment mech­a­nism where such debit or­ders get pre­sented for pay­ment”. The onus is on you, the ac­count holder, to reg­u­larly scru­ti­nise your ac­count state­ments and bring to the bank's at­ten­tion any unau­tho­rised en­try, it says.

“Re­gret­tably, some users of the debit or­der sys­tem do abuse it. To ad­dress th­ese is­sues, the South African Re­serve Bank, in con­junc­tion with [Pasa] and the bank­ing industry, have put mech­a­nisms in place to bet­ter man­age users of the sys­tem and are de­vel­op­ing an ‘au­then­ti­cated debit or­der sys­tem’ that will give cus­tomers greater con­trol,” Stan­dard Bank says.

The bank says that if you, as a cus­tomer, want to re­port and re­verse an unau­tho­rised debit or­der, you need to re­port it to the near­est branch within 40 days. You must com­plete a dis­pute form con­firm­ing that you give the bank con­sent to do the re­ver­sal.

First Na­tional Bank (FNB) is also work­ing on re­ver­sal func­tion­al­ity via its dig­i­tal plat­forms, with de­tails to be an­nounced next year, Ryan Prozesky, FNB’s chief ex­ec­u­tive of value bank­ing so­lu­tions, says.

FNB says it “fully sup­ports the right of our con­sumers to dis­pute, stop and re­verse debit or­ders with­out in­con­ve­nience”. Cur­rently, cus­tomers can re­verse unau­tho­rised debit or­ders and re­fund their ac­counts al­most im­me­di­ately, Prozesky says, but they must ask for as­sis­tance within 40 days of the debit oc­cur­ring, at a branch or via FNB’s call cen­tre.

FNB has sev­eral sys­tems in place to help you, he says. Cus­tomers re­ceive an SMS if the bank iden­ti­fies a debit or­der that could pos­si­bly be unau­tho­rised, re­gard­less of the amount; and no fees are charged when a cus­tomer re­verses an unau­tho­rised debit or­der.

At Ned­bank, An­ton de Wet, the man­ag­ing ex­ec­u­tive of client en­gage­ment, says that Ned­bank does not cur­rently of­fer a dig­i­tal so­lu­tion be­cause, un­til re­cently, the rules pre­vented this – they re­quired writ­ten con­sent with face-to-face in­ter­ac­tion, which could be done only at a branch. “We are look­ing at how we can now phase in chan­nels such as call-cen­tre, in­ter­net and mobile bank­ing,” he says.

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