HOME    DEBITSURE    CREDITSURE    ABOUT US    F.A.Q's    DEBIT ORDERS &    STOP ORDERS    NEWSLETTERS    DOWNLOADS    LINKS    CONTACT US    ARCHIVES     Information on Debit Orders and Stop Orders 1. What is the difference between "Stop Order and Debit Order?" 1.1 A stop order is an authorisation by a customer to his bank to deduct, at regular intervals, a fixed amount of money from his account and pay it over to someone else eg. a father may go to his bank and sign a stop order form authorising his bank to pay a certain amount into his daughter's account on the 25th day of each month. 1.2 A debit order is an authorisation given to the intended beneficiary of the payment to remit a debit entry to his account for a fixed or variable amount, at regular intervals or a once-off payment eg. a customer takes out an insurance policy and authorises the insurance company to debit his bank account each month with the premiums. A magnetic tape containing details of all debits to be passed will normally be handed by the insurance company to its bank which will arrange for all the debits to be 'pushed' through to the insurance company's customers' bank account and credit the insurance company's bank account with the total. It must be emphasised that the bank does not check the debit orders going through to customers' accounts. For example, if a customer authorises a User to debit his account each month with R100, but the bank debits his account with R200, the bank will not be able to detect this error. It is therefore the responsibility of the customer to check his own bank statements to ensure that the amounts of the debit orders are correct and notify the bank of any errors. 2. Who may use the Debit Order System? Any organisation may use the debit order system to enable it to collect payments from its customers, but it would first need to approach its own bank for approval. This bank, known as the sponsoring bank, will only give its approval once certain laid down criteria are met. The sponsoring bank will only approve financially sound organisations with good track records with itself. 3. Who are the persons involved in the debit order system? 3.1 The User - this is the firm which passes the debits to its customers' accounts and credits its own account with the total. 3.2 The Sponsoring Bank - this is the bank that approves the User's access to the debit order system and keeps an eye on its transactions. 3.3 The Customer - this is the person or legal entity who authorises the User to debit his/her account. 3.4 The Homing Bank - this is the bank where the customer keeps his account. 4 How is the Debit Order System Administered? The provisions of the Bankserv EFT (Magnetic Tape Service) User Manual govern the debit order system. Bankserv is an umbrella body which manages joint bank operations such as the Automated Clearing Bureau and Saswitch. The User Manual regulates the rights and obligations of the parties to a debit order system. 5 What are the Important Rules Governing the rights of Customers? a) The User must obtain a written authority from the Customer before any transactions can be processed through the Magtape Service. b) There is also provision for Users to use voice-recorded authorities under certain circumstances. If a voice recording is used, the Customer should thereafter confirm the conversation in writing. c) When a debit order is returned "Payment Stopped" on the instruction of a Customer, the User may not process further debits under the system. The Customer has to give their bank a written stop payment instruction. Once the user receives a returned debit order marked "payment stopped", the authority under which it was processed is deemed to be revoked and the User must ensure that no further transactions are processed under that authority. d) If a debit order is unpaid for lack of funds the User may resubmit the item but may not adjust the value of the transaction. The Homing Bank will return the debit order marked "not provided for" to the User's nominated account at the Sponsoring Bank. e) If the Customer closes the account from which the debit order is paid, the debit is returned "Account closed". The User is then not permitted to process any more debits. f) If a debit order is unpaid on two consecutive occasions for lack of funds the User must remove it from the system. g) The Customer may reverse a disputed debit order from his/her account within 40 days of it having been debited to his/her account, by instructing his/her bank to do so. The bank will then immediately reverse the debit. h) If the Customer only reports the debit more than 40 days after it appeared on his/her account, he/she may have apply to his/her bank to have it reversed. The bank will query the validity of the transaction with the User that debited the account. The User's bank will be given 30 days written notice to prove the validity of the transaction after which it will be cancelled if invalid, and the funds manually returned to the Customer’s account. If the User's bank does produce a valid mandate for the transaction, then the debit will not be reversed. The bank is only expected to check for an apparent authorization - which will normally be the Customer's signature on an authorization to debit form. The bank is not expected to act as a court in deciding on disputed signatures, services not provided or any other dispute between the User and the Customer. Disputes of this nature are between the Customer and User to sort out by litigation or any other legitimate method. 6 How is the Debit Order System Abused? a) Users may pass debit orders through the bank system which have not been authorised by the Customer. The User may do this intentionally hoping that Customer does not notice the debit order going through his/her account. b) Users may also break the rules laid down by the banks in cases where Customers have endeavoured to cancel their contracts with the Users. They may, for example, do this by continuing to push through debits where Customers have placed stop payments on the relevant amounts. c) An instruction to cancel a debit order only remains on the bank's system for 6 months. After this period a User may again attempt to debit the account and it will be processed. It is important that the Customer checks his/her statements regularly for fraudulent debits. The contract between the bank and Users of the system * Once the Customer has authorised a debit order, the User cannot transfer any of its rights to the debit order to a third party without the Customer’s prior consent. * Users must produce auditors’ certificates at 12-monthly intervals confirming to the banks the existence of their authority to debit the Customer’s bank account. * If there are not enough funds in the Customer’s account to meet a debit order, the User can re-submit the debit order the next month. It cannot adjust the value of subsequent transactions to recover arrears. Separate debit orders must be submitted for the current and arrears payments. * If the Customer has closed the account, the User should stop submitting debit orders with immediate effect. As a new precaution, the banks have introduced a process to identify those Users who have not conformed to the rules of the debit order system. These Users are then disqualified from further use of this facility. TOP , , PRIVACY POLICY       II       ANTI-SPAM       II       AUP