Why Authenticated Collections?
The South African Reserve Bank (SARB) has instructed the banks to develop a new industry solution, now called Authenticated Collections which will require collectors to submit their mandates to their customers for authentication using the latest technology.
This was done due to concerns about the increase in fraudulent debits being submitted through the NAEDO (EDO) payment stream over the past few years.
How will Authenticated Collections work?
The Authenticated Collections solution will enable collectors to authenticate their mandates upfront and register the mandate with the account holder’s bank.
All subsequent debits submitted will then be verified against the mandate which has been registered before being processed to the account.
Both a real-time and batch options will be available for authenticating mandates, in order to cater for the needs of different types of collectors.
When will it be implemented?
The SARB has instructed that the banks must deliver the Authenticated Collections service from 30 September 2016.
It has also been specified that NAEDO transactions will no longer be allowed to be processed from the date on which Authenticated Collections are introduced.
All collectors using NAEDO will be allowed until 30 June 2017 to convert existing NAEDO mandates to Authenticated mandates after which NAEDO will cease to exist.
This means that after 30th of September 2016 the only debits which will be allowed to be processed will be:
debits with Authenticated mandates and
debits with NAEDO mandates dated prior to 30 September 2016.
What is next?
PASA and the major banks are aware of the potential for disruption these changes may bring, and have consulted widely to draft a migration plan for approval by the SARB.
If agreed to by the SARB, we will send our customers details of the migration plan and begin working towards implementation of the system.
Direct Debit understands the concerns that our customers might have regarding the potential impact that these changes will bring to their current collections.
We want to assure all our customers that we will keep them informed of all relevant details regarding the new Authenticated Collections service and will also assist each business with the migration from the NAEDO (EDO) payment stream.
If you should need any further information on this, please do not hesitate to contact us.