DebiCheck readiness and why AEDO is still needed

Keith Wrede, Deputy Managing Director for NuPay.

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DebiCheck, a new debit order authentication system from NuPay, a division of Altron, has been successfully deployed as a tool to fight fraud and empower account-holders; giving them the ability to view and accept or reject requests to debit their accounts with greater flexibility and functionality than before.

As the system finds its bearings and matures into readiness, there is still a place for its predecessor, the Authenticated Early Debit Order system (AEDO).

Keith Wrede, Deputy Managing Director for NuPay, explains: “Since its launch in 2006, AEDO has become a robust authentication system. Although the system is more rigid than its successor, there will always be a need for fixed value and fixed term transactions.”

“DebiCheck has more to offer to South Africa banks, businesses and account-holders in terms of user options, security and overall functionality,” adds Vaughn Hechter, Head of Customer Services for NuPay.

Key benefits

DebiCheck is designed with both functionality and security in mind, the latter of which is more important than ever in the current fintech landscape as “many South Africans have fallen victim to debit order abuse”, says Wrede.

Consumers avoiding valid debit orders and businesses acting in bad faith by processing invalid debit orders have become all too common occurrences, leaving account-holders and businesses out of pocket. DebiCheck ensures the secure authentication of every debit order transaction.

Bongani Mngomezulu, Financial Manager for NuPay, explains: “There is a well-understood and accepted need for DebiCheck among users – to combat debit order abuse, and to provide a degree of certainty around the reversibility of valid and legal debit orders.”

The system is beneficial to account-holders and businesses, providing layered security to both parties. NuPay built its DebiCheck solution to be backwards-compatible and shares the same look and feel of AEDO, which NuPay customers have become accustomed to.

It operates in a way that is familiar and comfortable, despite many technological innovations on the back end of the solution. “The solution’s readiness is apparent, and as it continues to mature, it will become more and more efficient,” adds Wrede.

Financial literacy is key

DebiCheck also has a role in promoting more education and stability for South Africans regarding fraudulent debit orders. In the past, if you made a cheque out to cash and it bounced, you could be arrested for fraud.

Today, if you simply agree to debit orders with a supplier, and don’t sufficiently fund your account for those orders to go through, it could be deemed as fraud. “Transactions ‘bouncing back’ cost banks, businesses and account-holders money. DebiCheck helps to ensure debit orders can’t be agreed to unless they’re valid and can’t be processed without a proper mandate to do so,” says Wrede.

How does it work?

The mandate and authentication or approval

Mngomezulu explains: “The terms of the contract underlying a transaction and those payment terms are put into a mandate, which is sent by the creditor to the debtor's bank and on to the debtor for approval; ie, authentication. The collection, or debit, occurs later in line with the mandate.”

Hechter expands on the consumer journey and the various flexible authentication methods when using DebiCheck.

“A merchant or user of the system would initiate a transaction through either Transaction Type (TT1, TT2 or TT3).”

A TT1 or TT2 transaction would be communicated by:

1. A USSD phone message, where the consumer will have the option to accept or decline the debit.
2. An ATM machine, where a message will be sent to the consumer’s phone, and they can use their card and PIN number in an ATM machine to accept or reject the debit.
3. A banking app, where the options to approve, decline or ignore the request to debit can be selected.
4. Internet banking services, where consumers can log on to their bank’s Web site and authenticate the transaction.
5. In person, at the consumer’s nearest bank branch.

Consumers can also review and authenticate debits using TT3 - a terminal which can often be found in the business - before sending them to the bank. This can be done by the consumer by presenting their bank card and entering their secret PIN (as with normal card purchases) and a secure mandate authentication request will be sent to the bank for processing.

The actual debit order collection

The bank will then, at a later stage, receive the debit order collection request from the account-holder’s creditor or service provider against the mandate which is registered as above and process it

Moving forward

“DebiCheck has proven to be an effective system during COVID-19, where face-to-face interaction has had to be kept to a minimum," says Hechter.

“Having been deployed to customers remotely during a big push to get the system processing under pressure has proved its readiness. Although AEDO and Non-Authenticated Early Debit order (NAEDO) were due to be discontinued with the implementation of DebiCheck, we’ve seen that there is still a necessity for these systems, and that they can work in conjunction with each other for the time being.” he concludes.