Debit Orders and Stop Orders
Many people have debit orders and stop orders deducted from their bank accounts every month without understanding the difference between the two.
A debit order is a contract between yourself and a third party etc. an Insurance Company, Vodacom, Financial Institution. It authorises the third party to deduct a certain amount on a specified basis (usually monthly) from your bank / Visa / Mastercard account. Your bank cannot stop or change a debit order, it can only ensure that the debit order is processed against your specified account. Only the service provider in whose favour the debit order was implemented can affect any changes on the debit order.
A stop order is an arrangement between the customer and his bank in terms of which a certain amount is paid to a third party on a specified basis. The customer can revoke or change a stop order at any time by instructing his bank accordingly.
A stop order comes into effect when you arrange with your bank to pay a certain amount from a specified account to a third party on a specified basis.
Early Debit Orders (EDO)
Early Debit Orders are collected from customer account shortly after midnight immediately after the processing of EFT credit payments such as salary payments.
Early Debit Orders are processed against your account, just after midnight and immediately after processing of Electronic Fund Transfer payments into your account, etc. your salary. It the debit order request is not met successfully, it can be presented for a number of days of when a deposit is made into your account.
EFT Debit Orders
The processing of Electronic Fund Transfer Debit Orders (EFT) takes place later in the day, on a chosen date by the customer (usually after business hours).
When it happens that an EFT debit order is returned because it is not provided for on two consecutive action dates mandated for, the debit order is removed from the system by the third party. A new mandate for future payments to be made then have to be obtained from you by the third party.
The Stopping of Debit Orders
You have to provide the third party that is authorised to make deductions from your account with a written cancellation or other suitable notification that you are cancelling the debit order.
If you want to stop a debit order payment for a certain period – you have to ask your bank to implement a stop payment instruction on your account. The Bank will inform you on the duration of the stop payment and normally charge a fee for their service.
Please note that a stop payment instruction DOES NOT CANCEL THE DEBIT ORDER. It only prevents your account been debited for a specified period of time. If you want to cancel a debit order – you have to instruct the third party collecting the money from your account as explained above.
Debit Order Disputes
There are numerous reasons why you can dispute a debit order against your account :
When an amount has been deducted from your account by the third party before the specified date of the instruction.
When the third party continues with collection of a cancelled debit order or one where you have authorised a stop payment instruction.
When your account has been debited with an incorrect amount.
An unauthorised debit order has been collected against your account, or it was collected in a manner that was not authorised, etc. the collection amount has been split in two or several debit orders have been consolidated and deducted in one amount from your account.
Any debit order that is not consistent with the mandate given by you.
Any unauthorised debit order and related fees may be reversed by the bank.
When you have given authorisation of a debit order using your debit card and PIN number – that debit order cannot be disputed.
Corporate Collect is a debit order management company in South Africa that has been managing and collecting debit order payments on behalf of different businesses for more than 15 years.
Our secure online 24/7 debit order facilities save time and money.
For more information about Why you should consider a debit order collections facility for your business – click here.
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To speak to us about how Corporate Collect debit order collections company can improve your cashflow – click here.