Registered Mandate marks a pivotal shift in South Africa’s debit order landscape. As we transition from the Registered Mandate Service (RMS) to the Registered Mandate (RM) payment stream, businesses and consumers need to understand its impact on RM debit order processing. While the initial article discussed the challenges of this change, it’s essential to acknowledge the significant benefits RM offers, especially as it aims to replace and modernize the EFT payment stream.
Registered Mandate (RM): The Modernisation of EFT
The Electronic Funds Transfer (“EFT”) debit order solution has long been a solution in South Africa’s payment infrastructure. The manner in which EFT debit orders have been processed has remained relatively unchanged since inception and its limitations have become increasingly apparent in a rapidly evolving financial landscape. One of the drawbacks of EFT is the fact that Debtor Banks have up to 4 business days to indicate whether the payment was unsuccessful.
Only upon receipt of the unsuccessful response does a business have certainty that the payment was successful. This delay hampers the ability of businesses to manage unpaid transactions effectively, and hampers businesses’ ability to serve their client in a dynamic manner and new or renewed products and services being offered to their clients are delayed due to the delay in unsuccessful payment responses being received from the Debtor Banks.
Additionally, the outdated EFT legacy format, which lacks support for richer data content, contributes to inefficiencies in the system. EFT’s are not contained in a register with the Consumer’s bank and as such Consumers also have no visibility of debit orders that will be presented for collection against their bank accounts, leading to potential misunderstandings and issues with account management.
Moreover, businesses only get one presentment day in a payment cycle to collect funds, as presentments over multiple consecutive days are not supported. After two consecutive unsuccessful debit attempts, the EFT Rules dictate that the authority to debit the account is cancelled and a new mandate must be obtained.
Enter RM, this payment stream directly addresses the key shortcomings of the traditional EFT system. One of the most significant advantages of RM is that it provides quicker responses from the debtor bank. Unlike EFT, where businesses often wait up to four business days to know if a payment was unsuccessful, RM ensures that the debtor bank replies on the same processing day. This immediate feedback allows businesses to manage their cash flow more effectively and reduces the delay in offering new or renewed products and services to their clients.
Another crucial feature of RM is its support for credit tracking. With RM, businesses can select tracking options that allow multiple opportunities for a debit order to be processed if the initial attempt fails due to insufficient funds. Tracking starts from 12:00 on the same day, offering real-time monitoring of account balances and payment statuses for up to 10 days—a significant improvement over the traditional EFT system, where such capabilities are absent.
In RM, collections are presented in a randomised fashion before EFT presentments, ensuring a fairer opportunity for all beneficiaries to collect. This randomisation prevents the prioritisation of collections based on predetermined schedules, leading to a more equitable processing order for both consumers’ and businesses’ bank accounts.
By modernising and addressing these specific limitations of the EFT debit order system, RM presents a more dynamic, responsive, and fair approach to payment processing, benefiting both businesses and consumers.
ISO20022: Focusing on Interoperability and Rich Data Integration
As the payments landscape becomes more complex, the need for robust financial messages and interoperability has never been greater. The transition from RMS to RM is not just about shifting payment windows; it’s about aligning with international best practices, particularly the ISO standards that govern robust interoperable messaging between financial institutions.
ISO compliance is a hallmark of an efficient payment system. It ensures that all participants in the payment process adhere to rigorous standards for data exchange and transaction integrity. This compliance is especially critical at this time where the Financial Action Task Force is working hard to remedy South Africa’s grey listing status and where additional information need to accompany each financial transaction being processed in the payments system.
Freddie Prinsloo, Amplifin’s Chief Innovation Officer, explains the significance of ISO compliance in the context of RM: “The adoption of the ISO20022 messaging standard allows financial institutions to include richer data with each financial transaction being processed, allowing all parties to be able to identify the originator, the recipient and the purpose of the financial transaction which is crucial in the fight against Money Laundering, Terrorist Financing and Proliferation Financing”.
RM: Advantages for Businesses and Consumers Alike
While the transition from RMS to RM may present challenges for certain industries, it also offers numerous advantages that should not be overlooked. For businesses, RM represents a significant improvement over the EFT Debit Order solution. The ability to register mandates against Business Accounts that are Juristic and may be dual signatory accounts, previously excluded from the DebiCheck system, opens new avenues for efficient and secure collections.
Consumers, too, stand to benefit from the RM system. One of the key advantages is the increased visibility and control over the mandates that have been loaded against their bank accounts. With RM, consumers can easily track their payment obligations, reducing the risk of unauthorised debits and improving overall financial transparency.
Moreover, the transition to RM aligns with the broader modernisation efforts within South Africa’s payment infrastructure, which aims to create a more inclusive, transparent and efficient system. By embracing RM, businesses and consumers alike can take full advantage of these improvements, positioning themselves for success in a rapidly changing financial landscape.
As the 10 March 2025 deadline approaches, it’s imperative for businesses to prepare for the full implementation of RM. While the transition may require adjustments to existing processes and systems, the long-term benefits far outweigh the short-term challenges. By investing in the right systems and solutions, businesses can enhance their collection capabilities, ensuring that they remain competitive in the payments landscape.
In conclusion, the shift from RMS to RM is not just a regulatory requirement; it’s an opportunity to embrace a more efficient and consumer-friendly payment system. By understanding the benefits of RM and taking proactive steps to adapt, businesses and consumers alike can look forward to an environment where payments are streamlined, transparent, and fully aligned with international standards.
