Online Legal…

We recently told you that Electronic Debit Order Authorisations are possible.  But I bet you are still using a paper authorisation form for your clients to sign in pen and ink. Why? Technology is there to help you with your business administration. Why not use it to obtain debit order authorisations electronically and avoid the hassle and costs of paper based authorisations?  This article is a discussion on how and why it is possible.  This is a complicated area of law and therefore the explanation is quite complex, but we have tried to make it as easy to understand as possible.

There is no legislation that prohibits you from obtaining electronic debit order authorisations.

First, let’s get an understanding of the relevant role players in the payment industry and the rules governing debit order authorisations:

• The National Payments System Act 78 of 1998 makes provision for the appointment of a payment system management body by the Reserve Bank of South Africa. The Reserve Bank has recognised the Payments Association of South Africa (PASA) as this body, to manage, govern, and control all matters affecting inter bank payments, payment clearing and settlement within the national payment system. All the major banks are members of PASA and parties to an agreement with PASA and one another under which the banks all agreed to implement the PASA clearing rules (PASA Agreement).  These rules deal with the requirements for debit order authorisations, amongst other things.
• Bankserv is an independent legal entity, initially established by the four major banks, that provides inter-bank electronic transaction switching services (including debit orders) to the banking sector.  In other words, Bankserv is the service provider responsible for the clearing and settlement of payments between the banks.

Now let’s look at the relevant parties to a debit order transaction:

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