Debit order fraud prevention and security measures for South African small businessesDecember 21, 2023
Customers, suppliers, business owners — you’re all busy. Regardless of the role you may find yourself in, you’re looking for something that’ll make your life easier. And if you run a business, you’re in need of a convenient and efficient way to collect payments from your customers.
You may need to collect recurring payments as part of your business model, such as insurance premiums or recurring billing for SaaS (software as a service). Either way, you need an effective debit order solution that makes your life easier.
Using a debit order collection service in your business can help you massively. You’ll be more able to maintain your business’s financial health and stability (more on that later). When you choose the right company to handle your debit order collection and management, you’ll breathe more sighs of relief than frustration. After all, wouldn’t you be relieved to streamline your monthly recurring billing?
Let’s uncover everything involved in making your payment collection a breeze as a business owner with a debit order collection facility!
WHAT IS DIRECT DEBIT (DEBIT ORDER COLLECTION)?
Before getting into the nitty gritty, you’ll first need to understand what debit order collections are.
Debit order collection involves your business being authorised by your customer to collect and agreed upon amount of money from their bank account on a specified date (e.g., collecting Rx from a customer on the 25th of every month for their gym membership).
Netcash believes in making running your business easier. With its complete Debit Order Collection system, you’ll be able to save time and avoid hassles when collecting recurring payments from your customers.
HOW DEBIT ORDER COLLECTIONS WORK IN A DEBIT ORDER SYSTEM
Here’s how effective debit order collection works:
- Mandates: the power of authorisation: Your debit order collection journey starts off with you obtaining a mandate from your customers. An electronic mandate allows your customers to give you permission to securely and conveniently collect payments from their accounts. They’ll give you their contact details, which usually include their primary cellphone number, secondary number, and email address. They’ll also share their bank account details from which you’ll receive payment.
- Use of banks or third-party processors like Netcash: After your customer has given you the authority to collect funds from their account, you’ll then use a bank or a reputable debit order company such as Netcash. This will help you deduct the correct amount from your customer’s bank account on the date agreed upon in the mandate.
- You or your customer can cancel the debit order: The cancellation of a debit order isn’t restricted to one party. That said, if you or your customer do cancel, it doesn’t mean the terms of sale or service provided are cancelled too. So unless the agreement has been cancelled, ensure you deliver the goods or service to your customer in line with it.
THE IMPORTANCE OF EFFECTIVE DEBIT ORDER COLLECTION
As a business owner, you can go beyond collecting payments with debit order collection and build a strong financial foundation for your business. You’ll find some important reasons for debit order collection below:
- Improved cash flow management: You can help your business maintain a healthy cash flow by making use of an effective debit order collection facility. Instead of manually collecting recurring payments from customers by having them pay via bank EFT, for example, you can automate the process instead. This makes it easier for your customers to pay you and leaves you with a steady stream of funds pouring into your business’s account. With this financial stability, you’ll be able to pay business expenses like purchasing inventory for sale or paying salaries, invest in growing your business, and weather unforeseen challenges.
- Enjoy saving costs: As mentioned earlier, manually collecting payments from your customers can be a tedious process. It requires a lot of time, energy, and resources from both your business and your customers. You want to avoid this administrative burden by implementing effective debit order collection.
- Have increased accuracy and security: Much like other business processes, like invoicing, you can experience payment discrepancies when manually recording payments made by your customers. By using an effective debit order collection system, you minimise errors and ensure that records of your transactions are accurate.
- Customer satisfaction due to met expectations: Your customers expect a convenient and seamless experience when doing business with you. Meet their expectations by offering them a hassle-free way to pay you, which fosters customer loyalty and satisfaction as a result.
- Mitigating payment risks: As a business owner, you’re not just trying to seize opportunities but minimise risks and threats as well. Late payments and payment failure can pose a threat to your business’s cash flow. Using an effective debit order system can help you automate payments and ensure your customers pay you on time.
- Data insights for informed decision-making: Data is the new oil, and an effective debit order collection system can offer you incredible insights that can unlock value in your business. You’ll have a much better understanding of your customers’ payment behaviour and, as a result, make informed decisions to drive business growth.
WHAT TO LOOK FOR WHEN CHOOSING A DEBIT ORDER COMPANY
Before you rush into choosing a debit order company, here’s what you should consider:
- Reliability and security: You want to ensure sensitive customer information is protected. Much like selecting an eCommerce gateway, it’s important to do your research beforehand. Find a company that has been in the business for many years and has worked with customers in your industry. It’s also important to establish if your preferred debit order company complies with the standards and regulations set forth by the Payments Association of South Africa (PASA). PASA is the body that regulates the participation of participants in the payment system.
- Integration and compatibility: Netcash partners with various software vendors to help make it easier for businesses like yours to integrate our debit order collection management software with your existing ones. Whether it’s your payment gateway or accounting software, you’ll enjoy smooth integration and avoid disruptions to your business operations.
- Reporting and analytics: It goes without saying that you need the right information at the right time to ensure the proper financial management of your business. With Netcash’s extensive reporting, you can make informed business decisions.
- Competitive pricing: You’re in business to make a profit, and one thing that eats away at your business profits is high costs. So, you want to make sure you understand your business’s financial position and choose a debit order company that fits your company’s budget. That said, it’s important not to cut corners; choose a debit order company that offers you value for money.
CHALLENGES ASSOCIATED WITH DEBIT ORDER COLLECTION
While there are definitely loads of benefits to using debit order collections in your business, there are a few challenges that might pop up along the way.
Here are some of the common challenges associated with this convenient payment collection method:
THE NEED FOR CUSTOMER CONSENT
Before you set up a debit order for a customer, you have to make sure you have their consent first. Now, this might be the tricky part: some of them may be a bit hesitant to give it to you. This is because people generally prefer to have control of their spending, and some may feel that a debit order limits this.
Tip: Yes, this can be a challenge. To overcome this, consider making it easier for your customers to agree to setting up a debit order. Encourage them to sign up for one when they first use your service or when changes are made to the contract (e.g., new prices). This makes the process a lot smoother and more convenient for your customers.
THE RISK OF FRAUD
While debit orders are less susceptible to fraud than credit card or debit card payments, they’re not entirely free of risk. Scammers are always on the prowl, but you can minimise their efforts by giving your customers a secure platform to process payments and offering DebiCheck debit orders.
Tip: It’s important to keep things secure when setting up those debit orders. Besides using secure, trustworthy platforms, don’t forget to ask your customers for proof of identity, like their ID and proof of residence. This simple step is crucial in protecting your business and its customers from fraudsters who might try to set up a debit order in someone else’s name. Safety first, right?
With a lot of administrative tasks to handle, it can be a bit of a juggling act to manage debit order collections. We’re talking about everything from reconciling payments to keeping those customer records up to date.
Tip: Use a debit order company like Netcash, and minimise all the work involved with debit order collections. Using comprehensive collection facilities makes collections a breeze.
Things don’t always work out smoothly. It’s possible that your customer’s bank might be having some technical issues, which could cause hiccups with the debit order system for your small business and you not receiving payment.
Tip: It helps to keep in mind that if a debit order isn’t successful, it’s not always your customer’s fault. Ring the customer and ask for clarification, or speak to their bank to find out if something’s wrong.
Netcash’s insightful reporting gives you the information you need as to codes returned from the bank – this helps to know whether the failure was due to insufficient funds, dispute, blocked, etc. It helps you as a business in managing that account going forward. If you find out that your customer had insufficient funds, you can separate via Pay Now Payment Request via SMS or email. Alternatively, you could offer a different debit date when their account has the most funds.
ADVANTAGES OF USING NETCASH.CO.ZA FOR DEBIT ORDER COLLECTION
Netcash can help you take your debit order collection efforts to the next level with a unique offering. By choosing the Netcash debit order collection service, your business will be able to overcome the challenges it faces when collecting payments from your customers.
You’ll enjoy enhanced efficiency, minimised fraud risk, a boost in customer satisfaction, and more. Let’s have a look at these benefits:
- Reliable and secure platform: Netcash has a reliable and secure platform that’ll help you process payments without the nasty headache of dealing with fraud and payment failures.
- Streamline your reconciliation process: Netcash will make your reconciliation process a lot easier by reducing the administrative burden that eats up your precious time and energy.
- Enjoy same-day account debits: With a premium same-day debit order service, Netcash will help you receive money in your business account on a working day following the action date. You’ll also have access to Netcash’s two-day service, where you receive the money on the same day as the action date. Just remember to submit the batch two full working days before the action date.
- Enjoy automated payments collection: We’ll help you automatically collect payments from your customers according to the date on their debit order mandate.
- Benefit from increased efficiency: Automate your business’s collection process with Netcash’s debit order collection service and save time and money.
- Take advantage of reconciliation: We’ll provide you with reports that’ll help you keep track of your customers’ debit orders.
- Enjoy fraud prevention benefits: Compared to other payment methods like credit or debit card payments, you may be surprised to find out that debit orders are less susceptible to fraud. As a leading payment processor, Netcash is PCI Level 1 Compliant, which means Netcash adheres to the most stringent data security standards in the payment card industry.
- Improve your customers’ satisfaction: Every business owner worth their salt knows the value of keeping their customers happy. Netcash can help give them a convenient and reliable way to pay you for your services.
TIPS FOR EFFECTIVE DEBIT ORDER COLLECTION
Need some help? Here are a few tips to help your business be more effective at collecting debit orders from customers:
- Avoid debit order disputes by getting consent from your customers beforehand. Also, save your mandates electronically or upload them to your Netcash system.
- Take the time to regularly track and monitor your debit order collections.
- Make sure relevant personnel know exactly how to set up a debit order.
- Touch base with customers who’ve missed payments.
- Figure out why your customers failed to make payments and try to mitigate this.
FINAL THOUGHTS ON EFFECTIVE DEBIT ORDER COLLECTIONS
Debit order collections aren’t as complicated as they may seem, and they can transform how you collect payments from customers. You can get paid faster and enjoy consistent cash flow in your business.
Netcash makes the whole debit order collection process super simple and stress-free. Streamline your collections and focus on scaling your business with Netcash.
Keen on learning more? Check out our DebiCheck service next.
Ronel is a dedicated Payments Advisor at Netcash, South Africa’s premier payment solutions provider. With a deep understanding of Netcash’s services, he expertly guides customers on Debit Orders, Salary and Creditor payments, Pay Now, eCommerce, and Risk Reports. Brent plays a vital role in helping businesses and organisations streamline their payments, providing cost-effective solutions that have a meaningful impact on our clients’ financial operations.