Introduction

Important factors to consider when processing debit order collections

This guide highlights key components to successfully process debit orders in South Africa.

Processing models

There are three possible processing models available for debit order collections. The optimal model depends on your specific business requirements and preference for speed to market.

Model	Description	Best suited to
SO	A System Operator (SO) is a non-bank entity that provides services in relation to payment instructions, i.e. it provides electronic means (including the delivery to and/or receipt of payment instructions) to two or more persons to allow such persons to make payments and/or to receive the proceeds of payment instructions.	Large corporates
TPPP	A TPPP accepts money or the proceeds of payment instructions from two or more payers for on-payment to third persons to whom the money is due.	Small to mid size businesses
	A TPPP is typically enabled by a SO and may hold funds for payment due in its bank account for a limited period. The SO only provides the technology but does not accept the funds into its bank account for on-payment to another party.
	All TPPPs have to be registered by a clearing participant. A list of registered TPPPs is publicly available on the PASA authorisations website.
TPPP Hybrid	Same as TPPP, but allows the merchant to have collected fund settle into their own bank account	Both mid to large corporates looking for fast market entry

Choosing the best model for you

If you are unsure which processing model will work best for your business, please contact your Revio account manager or transactional banker.

The following guidelines can help you make a decision:

Model	Speed to market	Real-time settlement	Own abbreviated name	Automated reconciliation	Pricing	Processing limits	Transaction fees
SO	Low	Yes	Yes	Yes	Negotiated with bank	Negotiated with bank	Charged by Bank
TPPP	High	Intra-day	Yes	Yes	Revio	Revio	Charged by Revio
TPPP - Hybrid	Medium	Intra-day	Yes	Yes	Revio	Revio	Charged by Revio

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Acquiring bank

At this stage, Revio supports debit order collections through Standard Bank as our acquiring bank. SO and TPPP-Hybrid processing models require merchants to open a Standard Bank account for settlement purposes

Cut-off times

Banks, and therefore Revio, impose the following cut-off times to ensure the timely collection of debit orders in line with the national payments system.

Service type	Weekday cut-off	Weekend cut-off
EFT Collect/Pay: Same-day (SSVS)	08:00 - 16:20	08:00 - 09:45
EFT Collect: Dated (1-day)	08:00 - 16:00	08:00 - 10:15
EFT Collect/Pay: Dated (2-day)	08:00 - 14:30 two days before action day	08:00 - 09:00
DebiCheck/RMS Collect	08:00 - 16:00 two days before action day	08:00 - 11:00 two days before action day
DebiCheck TT1a/b	03:00 to 18:30 every processing day	03:00 to 18:30 every processing day
DebiCheck TT2	03:00 to 18:30 every processing day	03:00 to 18.30 every processing day
DebiCheck TT3	Not available	Not available
AVSR	24hr	24hr

Reconciliation

Revio automatically reconciles bank results for Collections and Payments. These results, as received, are made available to you in real-time.

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Bank statement reconciliation

Speak to your Revio account manager to activate real-time debit order to bank statement reconciliation

When activated, Revio's reconciliation engine will automatically reconcile your bank statement to your debit order results. Reconciled transactions can be identified when querying results and observing the statementId field. Revio will inform you when the reconciliation service is not able to reconcile results.

Managing unpaid transactions

Due to variable consumer incomes and high indebtedness in South Africa, debit orders can fail regularly. The following PASA rules apply for managing debit order failures due to insufficient funds ("unpaids"):

• If a payment instruction is returned as "Unpaid," the Merchant cannot resubmit the transaction until the next scheduled mandated date.
• If a payment instruction is returned as "Not provided for" for two consecutive mandated action dates, the Merchant is prohibited from resubmitting the transaction unless a new mandate has been obtained from the payer, ensuring authorisation for future payments.
• When a payment instruction is returned as "Account Closed" or "Payment Stopped," the Merchant cannot resubmit the payment instruction.
• If a payment instruction is deemed invalid due to system errors or technical issues, it may be resubmitted after the necessary corrections have been made.
• Other banks will electronically return unpaid payment instructions within four (4) business days following the action date (EFT debit orders only).

Managing disputes

Customers can dispute both EFT debit orders and DebiCheck collections. Due to the electronic mandate authentication of DebiCheck, disputes for this payment method are less likely but should be catered for in your operational processes.

Essential PASA rules apply for managing disputes:

• The account holder retains the right to dispute a debit order payment instruction processed against their account. Should a customer dispute a transaction within 40 days of the action date, the transaction will be returned for one of the following reasons:
  • The transaction lacks proper authorisation in the form of a mandate.
  • The transaction violates the terms outlined in the mandate.
  • The mandate associated with the transaction has been cancelled.
  • If a dispute is lodged beyond 40 calendar days after the action date, the account holder's bank will notify the Merchant and allow them 30 days to provide evidence of the necessary mandate.

Failure to submit the requested information within the specified timeframe will result in the bank debiting the Merchant's account and refunding the account holder for the transaction.

However, in cases where a dispute is received for a transaction where the Merchant possesses a voice-recorded mandate, the bank will immediately debit the Merchant's account and refund the account holder for the transaction upon receiving the dispute notification.

Key terms

Term	Definition	Examples
Instrument	Method of transferring money	EFT, NAEDO, DebiCheck
Service type	Specific instrument types	Same-day, 1-day EFT
Input file	A flat-file that is uploaded (by Revio) to the bank via SFTP containing a list of payment/collection instructions for that day
Reply file	A file containing a reply from the bank indicating whether the input file is accepted for processing or not
Output file	A file containing the status of each collection instruction status from the bank based on the input file
Action date	Date for a payment to be processed, with the smallest unit being a day	09-02-1993
Non-processing day	A day on which the bank will not process collections or payments	Public holidays, bank holidays, etc.
Profile code	Code that is given to a merchant to process their input files. The merchant obtains this code from the bank
Profile limit	The maximum amount a client can collect per instrument per month	R1,500,000
Debit Sequence Type	"FRST" - First - When "First Collection Date and Amount" in Mandate is populated. After this, "Sequence Type" to be used as per Mandate “OOFF" - Once Off: Mandate field "Debit Sequence Type" is "OOFF" “RCUR" Re-Occurring - If "First Collection Date and Amount" in Mandate not used, refer directly to "sequence type" “RPRE" - Re-Presented: if previous transaction was unsuccessful, "RPRE" to be used. Afterward default back to "Sequence type" as per Mandate “FNAL" - Final collection of the mandate. No more collections will be allowed against the mandate. If required to re-instate, mandate amendment to be completed with re-authorisation
Abbreviated name	Identifier that the customer will see on their bank statement identifying the merchant, its product, or service	REVIO

Debit order landscape

The debit order payments landscape typically has 4 impacted parties for each transaction:

1. Sponsoring/Acquiring bank
2. Paying/Issuing bank
3. User/corporate client/merchant
4. Consumer

Debit order landscape unpacked

Party	Description
Sponsoring/Acquiring bank	This is the activity through which a participating/sponsoring bank enables an approved “Merchant” (a business, not an individual that is the beneficiary of the debit order) to collect funds, mandated by customers of the paying banks, from the paying customer’s account, at the sponsoring bank and/or other participating banks.
	The collection acquiring activity is exclusively performed by the business/commercial/corporate segments of banks, on behalf of their clients.
	Acquiring/Sponsoring banks collect fees from their business/commercial/corporate customers for the direct debit service (including EFT Debit, AEDO, NAEDO and DebiCheck).
	Fees are charged for successful collections, collection tracking, and penalty fees for unsuccessful collections.
Paying/Issuing bank	This is the activity whereby the Paying banks process debit order instructions against their customers’ accounts, which instructions include the collection information/reference provided by the User.
	The information reflects on the customer’s bank statement to enable the customer to identify the source of the debit.
	Collection issuing is largely performed against consumer accounts by the retail segments/divisions of banks, on behalf of participating acquiring banks (and ultimately their business clients that they have sponsored into the National Payment System).
	The issuing banks collect a “homing fee” from the acquiring bank for the work that they do to collect the money from their account holder base.
	The issuing bank also (in most cases) levy a collection fee from the consumer whose account is being debited (and a penalty fee if there are insufficient funds to perform the debit transaction).
	Banks can be debit collection issuers without having to be acquirers.
	Issuing banks typically generate more fees from the collection activity than the acquiring banks.
User/Corporate client/merchant	The collector/beneficiary of the debit order, commonly referred to as a “User” by the banks, must obtain authorisation from the customer to collect the funds from the customer's account through a signed, electronic, or voice recorded Debit Order Mandate.
	The Mandate given by the customer typically authorises the collections on a specific date, or repeatedly, on a fixed date every month, for a fixed amount or a variable amount with an upper limit or fixed annual increase (e.g. increased by 10% each year).
	A “User” is a party who has been approved by a participating/sponsoring bank and is facilitated by such bank in the payment system to be able to collect funds, mandated by customers of the paying banks.
Consumer	Paying banks process debit order instructions against the customer’s account which instructions include the collection information/reference provided by the User. The information reflects on the customer’s bank statement to enable the customer to identify the source of the debit.