Early Debit Order (EDO

By: Bankservafrica  11-11-2011
Keywords: Debit Orders

EDO is a bulk collections processing system aimed predominantly at the micro-finance industry, although many other industries are also finding this service useful; the major benefit being to reduce the risk of non-payment to the micro financier.

The system caters for debit order requests up to R5 000.00, facilitating randomised preferential collections within the banking systems. The reason this system is known as “early” is that these collections are processed prior to the conventional EFT debits by the banks, thereby allowing for a better chance of payment fulfilment. BankservAfrica offers an interbank payment and settlement service that operates 365 days a year and caters specifically for early debit orders.

The authenticated early debit order (AEDO) system allows for customers to be authenticated by way of swiping their debit card and entering their PIN number through AEDO, thereby verifying an existing relationship with a bank, which in turn reduces the risk of fraud. The full information relating to the mandate (loan repayment agreement) and contract is loaded onto a database housed at BankservAfrica.

The non-authenticated early debit order (NAEDO) system allows for contracts with non-authenticated clients to be registered where it is deemed acceptable to do so. This often applies when banks make use of the system themselves and already have relationships with existing clients.

Features and advantages

  • Early debit order system consists of two products, namely AEDO (authenticated) and NAEDO (non-authenticated):

    EDO debit requests are mandated preferential debits, receiving preference over EFT collections, with AEDO requests generated from the BankservAfrica database and NAEDO requests received from acquiring banks. This service runs 7 days a week 365 days a year, with various SLA timeframes over a 24-hour period for requests, responses, disputes, recalls and settlements. This system is a credit push and not a debit pull arrangement, so there are no unpaid transactions. Notifications of unsuccessful requests are received by Acquirers and successful requests are settled by BankservAfrica.
  • Authenticated early debit orders (AEDO):

    AEDO acquiring and issuing is supported by various banks. Mandated contracts are registered on BankservAfrica’s AEDO database using card and PIN authorisation from issuing banks, which may not be disputed by account holders, thus providing a greatly reduced risk of fraud for the merchant. There is no need for a merchant to retain the card and PIN to collect repayments (this has now been outlawed). Credit tracking may be included (up to 32 days). This provides greatly increased prospects of successful collections when deposits are paid into accounts or if limited funds are available.
  • Non-authenticated early debit orders (NAEDO):

    Acquiring and issuing requests are supported by various banks, with these requests being handled in a preferential manner by banks and credit tracking may be included (up to 32 days).
  • Credit tracking:

    There is a much higher chance of a successful collection when deposits are paid into accounts.
  • Interbank bilateral billing:

    BankservAfrica handles interbank bilateral billing automatically on behalf of banks, which reduces the complexity thereof for the banks.
  • Micro lenders affiliated to customer service providers (CSP’s):

    CSP’s work through their acquiring banks linked to BankservAfrica, particularly for AEDO. This enables access to management information and the AEDO database (their contracts only).
  • Instalments from BankservAfrica are routed to issuing banks as debit requests:

    Bank officials are safe in the knowledge that these are legitimate authenticated debit requests with an added benefit of risk management.
  • Secure online output to banks:

    The originating bank always receives a “successful” or “not successful” transaction confirmation message.
  • Service windows:

    There are multiple daily cut off times to facilitate settlement as well as manage risk and exposure.
  • Escalation procedures:

    Full internal and external escalation procedures are in place.
  • Problem resolution:

    There is 24-hour access to support 7 days a week, 365 days a year, with quick problem resolution and high system availability.
  • MIS service and reports:

    Comprehensive MIS is available online or via reports.

Keywords: Debit Orders

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