Payment Method Comparisons
DebiCheck and EFT Debit Orders are both used for processing recurring payments, but they differ in terms of authorisation, security, and operational mechanics. Here's an explanation of the key differences:
1. Authorisation Process
DebiCheck: Requires the payer (customer) to electronically approve each new debit order mandate before any deductions occur. This can be done via their bank's app, internet banking, or USSD. Approval ensures that the customer explicitly consents to the terms of the payment.
EFT Debit Order: Authorisation is typically done via a signed paper or digital agreement (e.g., through email or a website). The bank is not directly involved in the approval process, meaning the authorisation relies on the company and customer agreement.
2. Bank Involvement
DebiCheck: Banks are directly involved in the authorisation and processing of each new mandate. The bank validates and tracks the mandate to ensure compliance and customer consent.
EFT Debit Order: Banks are not directly involved in validating mandates. Instead, they simply process the debit orders based on instructions provided by the company.
3. Security
DebiCheck: Offers enhanced security. Because the customer must approve each mandate through their bank, fraudulent or unauthorized debit orders are significantly reduced.
EFT Debit Order: More vulnerable to fraud since mandates are not validated by the bank. Disputes can arise if customers claim they did not authorize the payment.
4. Dispute Process
DebiCheck: Disputes are less common because of the mandatory approval process. If a dispute arises, it is easier to resolve since the bank holds a record of the customer’s approval.
EFT Debit Order: Disputes are more frequent, as customers can dispute unauthorised debit orders up to 40 days after the deduction. In some cases, customers can request a reversal without proof of fraud.
5. Flexibility
DebiCheck: Mandates are specific, requiring approval for any changes, such as adjustments to the payment amount, frequency, or collection date.
EFT Debit Order: Offers more flexibility for recurring payments. Adjustments can often be made without additional authorisation from the customer.
6. Use Cases
DebiCheck: Ideal for high-value or sensitive payments, where customer consent and compliance are critical. Commonly used in industries like insurance, microfinance, and subscription services.
EFT Debit Order: More suitable for low-risk or low-value recurring payments, where the likelihood of disputes is minimal, such as gym memberships or small subscriptions.
7. Legal and Regulatory Compliance
DebiCheck: Complies with stricter regulations under the South African Reserve Bank’s Authenticated Collections Project, ensuring that customers have more control and visibility over debit orders.
EFT Debit Order: While still regulated, it does not meet the same stringent requirements as DebiCheck for customer authorization and tracking.
Summary of Key Differences
Mandate Verification
Not verified by the bank
Verified & approved by account holder
Registered with bank (no customer approval)
Supported Accounts
Individual & Business
Individual only
Individual & Business mostly
Risk of Dispute
High
Very low
Low
Processing Window
Early morning
Early morning
Late afternoon
Flexibility
Very flexible
Low - strict bank approval process
Moderate
Use cases
Donations, Subscriptions, Membership fees
Insurance, Loan Repayments
Business Collections, Club Fees, Rentals
In essence: DebiCheck provides a higher level of security and regulatory compliance, making it ideal for businesses prioritising customer trust and reducing disputes. Normal EFT debit orders remain a more flexible option for businesses with simple, recurring payment needs, while Registered Mandates (RM) offer a middle ground, supporting both individual and business accounts (in most cases) without requiring customer authentication.
Last updated