Debit Orders legal or daylight robbery?
Written by Karabo Masuku
Lately, I have experienced the wrath of my money going out of my bank account earlier than the expected date, in turn incurring double bank charges costs over and above the actual debit order cost.
Upon enquiry with my bank as to why they are allowing the service provider to scout my bank account and allow the debit order to be processed on a different date, they responded saying that this is a practice that is legal and ethical. All collections are done according to the clearing rules for electronic fund transfers and early debit order processes as per regulations of the governing body, Payments Association of South Africa (PASA).
PASA permits the service providers that collect payments by debit orders to “scout out” their clients’ bank accounts and access these bank accounts as they please to collect their payments due. However, service providers may only track the bank accounts that have pre- customer approval using either NAEDO or AEDO process.
The purpose of tracking and early debit order is to ensure that service providers get their payment as per contract. It is used to prevent people purchasing goods and services and then stop paying for them halfway through their contract.
Service providers were limited to collect up to R15 000 per debit order instruction, but as of the beginning of March service providers can collect up to R30 000 per day from clients’ bank accounts.
FIN24 queried this practice as well and found that neither the service provider submitting the debit order nor the banks seem to be under any obligation to warn their clients that debit orders will be paid earlier than usual, or on a different date to the one the client agreed to.
While payment is due to these service providers in terms of the contract with their clients, they completely ignore the arrangement with their clients to have the debit orders processed on a specific date.
Where is our world coming to, when your money that is in your bank account is not safe from others?