Welcome to the world of payment stream compliance within South Africa’s National Payment System. In this article, we will embark on a journey through the landscape of mandate requirements for various payment streams. By understanding the nuances of mandate compliance, businesses can confidently navigate this regulatory terrain while upholding professionalism and adherence to the regulations.
Before we delve into the specifics of payment streams, let’s clarify three important terms:
Authenticated collection: Also known as DebiCheck; DebiCheck refers to a debit order that must be authorised (through authentication) by the Payer, on a once-off basis, at the start of a new contract prior to the first instalment being processed against their account. These debit orders are presented during the early morning processing window.
Registered Mandate Service (RMS): Is a mechanism that has been approved by the SARB to facilitate a smooth transition to DebiCheck, specifically in instances where the cell phone contact details of the consumer are outdated at their bank and a “No response from the Debtor” response was received when a user has tried to authenticate a mandate via TT1 Real-time, TT1 Delayed, or TT2 Batch authentication. RMS transactions are presented during the second processing window.
EFT (Electronic Funds Transfer) Debit: An EFT Debit is a cost-effective debit order solution that is best suited for a low-risk Payer profile market or alternatively low-value payments in a high-risk Payer profile market. These debit orders are presented during the late debit order processing window.
The vitality of valid mandates
Before delving into the specifics of payment streams, it is crucial to recognise the paramount importance of a valid mandate. A valid mandate is the key that unlocks the ability to present a payment instruction against a Payer’s account. It represents the Payer’s consent, granting a user/collector the authority to initiate a payment instruction. Meanwhile, a debit order refers to the actual processing of a payment instruction against the Payer’s account.
Types of mandates: unveiling the options
Within the South African National Payment System, there are three recognised forms of mandates, namely:
- Paper mandate
Refers to a mandate which can be signed either traditionally with a pen – following which it needs to be filed and stored, or it may be signed electronically via a signature input device that supports this functionality – this is considered an electronically signed and stored mandate, not to be confused with an electronic mandate.
- Voice-recorded mandate
Refers to a mandate wherein the Payer has given their consent telephonically and a defined script that covers the below components has been used to get the Payer’s consent.
- Electronic mandate
An Electronic mandate is a debit order authorisation that can be signed or authorised by a client on any web-enabled device. It applies to any form of communication by email, the Internet, SMS etc. As per the Electronic Communications and Transactions Act (ECTA) there is no difference between a written mandate and an electronically signed mandate. In circumstances such as these, it is vital to note that the Payer’s identity must be confirmed to avoid unauthorised individuals from providing consent without the Payer’s knowledge.
The components of a valid mandate: building blocks of compliance
For any mandate to be considered valid, whether in paper, voice, or electronic form, it must include the following essential components:
- Full username: illuminating the entity
The mandate should clearly indicate the registered name, including the trading name of the legal entity involved.
- User Abbreviated Short Name (ABSN)/bank inscription/bank statement text: enabling identification
The Payer should be able to identify the entity debiting their account through concise and identifiable text that will appear on their bank statement.
- Contract reference number: connecting the dots
A unique reference number should be assigned to the agreement between the parties, linking the mandate to its contractual foundation and along with the ABSN will appear on their bank statement.
- Collection day: time for transaction
The Payer’s authorised specific day of the month or week for the presentation of collections against their account should be clearly communicated.
- Frequency of payment instruction: the rhythm of transactions
The regularity at which the payment instruction is presented for collection should be clearly stated, providing a predictable frequency to the collections.
- Date adjustment indicator: navigating changing collection days
A field indicating whether the collection day may or may not change, ensuring clarity in cases of fixed or adjustable collection days.
In addition to the above components, specific Payer details are required for a valid mandate, including:
- Surname, and full name, or initials of the Payer
- Identity, passport number, or temporary residence ID
- Payer’s bank
- Account number
- Amount owed.
- Disclosure to the Payer for the number of days credit tracking is enabled for (excluding EFT debit orders)
- Explicit authority by the Payer to debit their account.
- Authorisation of the Payer through written signature, biometric record, legally acceptable “electronic signature” performed on input devices with this functionality (not all devices do) and / or voice recorded verbal consent, along with the date of authorization.
However, it is important to note that for DebiCheck there are additional requirements that go above and beyond what is listed above when dealing with specific mandate types (fixed, variable and usage based). Below is a table illustrating the additional information that needs to be present on each of these mandate types beyond what is listed above:
|Fixed mandate||Variable mandate||Usage-based mandate|
|Initial amount||An amount that is not the same as the instalment amount. This is to be inserted in the mandate if applicable.||An amount that is not the same as the instalment amount. This is to be inserted in the mandate if applicable.||An amount that is not the same as the instalment amount. This is to be inserted in the mandate if applicable.|
|Instalment amount||The amount is a fixed recurring amount||The amount is a predetermined recurring amount which is subject to the adjustment category changes.||Is presented, if available.|
|Maximum amount||Can be up to 1.5 times greater than the instalment amount.||Can be up to 1.5 times greater than the instalment amount but is subject to the adjustment category changes.||Must always appear.|
|Adjustment category||Not required to be presented.||Refers to the ability of the Creditor (user) to adjust the instalment amount and / or maximum amount. This may be never, quarterly, biannually, annually, when the repo rates changes. Other than when ‘repo rate’ or ‘never’ is elected, one of the following must appear– adjustment amount (amount) or adjustment rate (percentage based).||Refers to the ability of the Creditor (user) to adjust the instalment amount and / or maximum amount. This may be never, quarterly, biannually, annually, when the repo rates changes. Other than when ‘repo rate’ or ‘never’ is elected, one of the following must appear– adjustment amount (amount) or adjustment rate (percentage based).|
Lastly, all mandates are required to be kept for 5 years following the completion of the collections.
Understanding mandate suspension and stop payments
In our exploration of mandates and debit orders, it is important to gain a clear understanding of two key concepts and these concepts amplify the requirement for a mandate to be complete and accessible should any queries be logged by the debtor or creditor banks or PASA: mandate suspension for DebiCheck and EFT Debits and debtor initiated stop payments specifically for EFT debit orders.
There are two categories of mandate suspensions, namely those which are system generated and those that are debtor initiated.
System-generated mandate suspension
System-generated mandate suspensions are rules implemented by the debtor bank and will occur under the following circumstances:
- After consecutive unsuccessful collection attempts (7 attempts for DebiCheck and 2 attempts for EFT Debits)
- Once the final collection has been processed successfully.
- When a once-off collection has been processed successfully.
- The Payer’s account is not in a state to allow collections for example: closed account, account holder deceased etc.
Debtor-initiated mandate suspension for DebiCheck
A debtor-initiated mandate suspension request may be made by the Payer under the following circumstances:
- The contract with the user or credit provider has been cancelled.
- The contract with the user or credit provider has expired.
- The contract with the user or credit provider has been amended.
On the other hand, when it comes to EFT debits a debtor my initiate what is called a stop payment – more on that below.
Debtor-initiated stop payment for EFT debits
A debtor-initiated stop payment request may be made by the Payer to halt an EFT debit on their account under the following circumstances:
- The Payer did not authorise the debit in question.
- The debit is in contravention of the original payment instruction, either in the form of the amount, date of collection or term of the debit being incorrect.
- The Payer has already instructed the user to cancel the mandate.
- The Payer has cancelled authorisation.
Conclusion: charting a course to compliance
Compliance with the regulations governing South Africa’s National Payment System hinges on understanding and adhering to mandate requirements for different payment streams. By ensuring the presence of all necessary components in a valid mandate, businesses can navigate the regulatory landscape confidently and maintain professionalism.
Furthermore, understanding mandate suspension, and stop payments allows for effective management of potential challenges. By implementing these best practices, businesses create a compliant and secure payment environment within the National Payment System, safeguarding their operations and fostering trust among stakeholders.