Debit order mandates explained

Due to the increasing number of debit order fraud cases, South African debit order companies have been instructed to comply with PASA’s rules relating to proper authorisation of debit order instructions to debit their customer’s accounts.

Let us start off with what a debit order instruction is and how authorisation is obtained by third party companies.

Debit order is a payment method used by third party companies to provide the bank with payment instructions to recover funds from the account of a paying customer in terms of the authority (mandate) granted to such a third party company.

In simpler terms, debit order can be described as a facility whereby a company can collect money from its customer’s accounts without the customer having to do anything other than providing signed or voice recorded approval to do so.

Hence, the most important component of running debit orders, is having proof of authorisation from your customer through one of the prescribed mandates accepted in practice.

As stated previously, each debit order service provider is required to obtain either a signed or voice recorded debit mandate from their customers. These mandates generally authorise payment collection on a specific date (or repeatedly on a fixed date) for a specific amount or variable amount.

The different types of mandates include paper, voice and electronic. Each of these will be discussed in more detail with their requirements below.

Paper Mandate

When users’ sign-up new customers the following minimum requirements must be applied for paper mandates –

• Account number
• Type of account
• Branch number
• Frequency of debit
• Abbreviated name on client’s bank statement
• Contract reference
• Action date
• Start and termination date
• Beneficiary name
• Beneficiary contact details
• Amount – Escalation of amount, variable amounts and maximum limits
• Signature of account holder

Voice Mandate

When users’ sign-up new customers the following minimum requirements must be applied for voice mandates –

1. The following details must be present during the voice recording process:
   • Abbreviated name on bank statement
   • Beneficiary name
   • Call centre name
   • Contact telephone number
   • Contract reference number
   • Current date
   • Commencement/Action date
   • Payer’s bank particulars, including account number, type of account, branch code
   • Surname and initials of account holder
   • Value of amount that will be deducted
2. The voice recorded mandate must be confirmed to the account holder in writing to the account holder within 21 days of the recording of the mandate and prior to any debit payment instructions being processed to the account of the account holder.
3. A customer must be made aware of the fact that his/her voice is being recorded and that the recorded message will be accepted as the official authority to debit.
4. A customer must be made aware of the unique contract reference and abbreviated short name to be reflected on the account holder’s bank statement.
5. Recording devices must be reliable and with acceptable acoustic quality (preferably SABS approved).
6. The recorded messages must be properly indexed for easy accessibility to promptly deal with enquiries and disputes.

Electronic Mandate

When users’ sign-up new customers the following minimum requirements must be applied for electronic mandates–

• Account number
• Type of account
• Branch number
• Frequency of debit
• Abbreviated name on client’s bank statement
• Contract reference
• Action date
• Start and termination date
• Beneficiary name
• Beneficiary contact details
• Amount – Escalation of amount, variable amounts and maximum limits
• Advance signature of account holder
• IP Address and location coordinates of each mandate

Direct Debit provides the only debit order collection facility in South Africa which allows for obtaining authorisation via signed electronic debit order mandates as well as both paper and voice mandates.