So that you can understand which debit order solution to utilize you will first require a comprehension of the differences in the three significant collection approaches: Authenticated Early Debit Order (AEDO), Non-authenticated Early Debit Order (NAEDO) and Electronic Funds Transfer (EFT).
EFT Debits
We begin with the first and most commonly used method, EFT. The EFT services are offered by several participating banks (eg. ABSA, FNB, Nedbank and Standard Bank), that allows organizations to process payments completely by computerised means. The service can be used for both acquiring payments from clientele (EFT debits) and for making payments (EFT credits). Payments can be done for wages, creditors, wages etc. Your enterprise may lodge payments and collections through their bank to all contributing banks.
Transacting with the EFT service
Both debit and credits may be processed from the system.
The below criteria applies:
- Credits may be processed towards cheque, savings and transmission accounts, and under certain circumstances, bonds, loans and subscription share bank accounts. Transactions larger or equal to R5 million rand are not allowed and will be homed back with the reason it exceeds industry imposed limits. Such transactions should be re-routed through the real time lines and not the operator.
- Debits may be processed against cheque, certain savings and transmission accounts. Debits to bond and subscription share accounts are not allowed. A greatest value limit of R500,000 per transaction was in place. - The separating or splitting of transactions to not have limit constraints will not be acceptable.
Coverage of the EFT service
The EFT service covers all types of accounts allowed by way of the EFT service rules and which are held in the Common Monetary Area by participating banking institutions. A directory of collaborating banking institutions can be obtained on application.
NAEDO Service
The NAEDO service is provided by collaborating banking institutions (eg. ABSA, FNB, Nedbank and Standard Bank), which allows enterprises as well as other bodies to collect payments totally by computerised methods. The service can be used for acquiring payments from clients (debits). NAEDO doesn't make provision to get a credit facility and EFT credit will probably be employed if required.
NAEDO repayment guidelines support multiple presentments thereof. If these are unpaid after the first presentment, credit monitoring can be invoked. Credit monitoring is optional and when selected, the unpaid NAEDO payment instruction can be represented during the mid-day of the same day and for the sequential amount of days selected, two times a day, on working days till payment is received or till expiry of the monitoring period selected.
All NAEDO payment instructions, are randomised giving all users an equal possibility of obtaining payment and are effected as close as possible after wage credits are paid in to the banking accounts of consumers early in the day.
Transacting through the NAEDO service
Only debits may be processed with the system. The below conditions will apply:
- Debits may be effected from current, certain savings and transmission accounts. Debits to bond and subscription share accounts aren't permitted. - A max value ceiling of R5 000 per transaction is in place. The dividing of transactions to avoid the limit constraints isn't accepted. - All NAEDO payment instructions ought to be distinctively recognizable through the Agreement Reference as well as payment cycle.
Coverage of the NAEDO service
The NAEDO service includes a variety of accounts accepted through the NAEDO Service policies and which are held in the Common Monetary Area by collaborating banks. A list of collaborating banks can be acquired on application.
AEDO Service
The AEDO service is just like NAEDO in most respects, but can not be very easily challenged as the transaction is started with the customers card and pin. AEDO is an effective strategy to offset collection risk and failures on payment.
Bottom line
Examples of where EFT and NAEDO services can be utilised is offered inside my previous article. The AEDO service could effectively be utilized for collection in a situation when NAEDO may have been made use of.
EFT Debits
We begin with the first and most commonly used method, EFT. The EFT services are offered by several participating banks (eg. ABSA, FNB, Nedbank and Standard Bank), that allows organizations to process payments completely by computerised means. The service can be used for both acquiring payments from clientele (EFT debits) and for making payments (EFT credits). Payments can be done for wages, creditors, wages etc. Your enterprise may lodge payments and collections through their bank to all contributing banks.
Transacting with the EFT service
Both debit and credits may be processed from the system.
The below criteria applies:
- Credits may be processed towards cheque, savings and transmission accounts, and under certain circumstances, bonds, loans and subscription share bank accounts. Transactions larger or equal to R5 million rand are not allowed and will be homed back with the reason it exceeds industry imposed limits. Such transactions should be re-routed through the real time lines and not the operator.
- Debits may be processed against cheque, certain savings and transmission accounts. Debits to bond and subscription share accounts are not allowed. A greatest value limit of R500,000 per transaction was in place. - The separating or splitting of transactions to not have limit constraints will not be acceptable.
Coverage of the EFT service
The EFT service covers all types of accounts allowed by way of the EFT service rules and which are held in the Common Monetary Area by participating banking institutions. A directory of collaborating banking institutions can be obtained on application.
NAEDO Service
The NAEDO service is provided by collaborating banking institutions (eg. ABSA, FNB, Nedbank and Standard Bank), which allows enterprises as well as other bodies to collect payments totally by computerised methods. The service can be used for acquiring payments from clients (debits). NAEDO doesn't make provision to get a credit facility and EFT credit will probably be employed if required.
NAEDO repayment guidelines support multiple presentments thereof. If these are unpaid after the first presentment, credit monitoring can be invoked. Credit monitoring is optional and when selected, the unpaid NAEDO payment instruction can be represented during the mid-day of the same day and for the sequential amount of days selected, two times a day, on working days till payment is received or till expiry of the monitoring period selected.
All NAEDO payment instructions, are randomised giving all users an equal possibility of obtaining payment and are effected as close as possible after wage credits are paid in to the banking accounts of consumers early in the day.
Transacting through the NAEDO service
Only debits may be processed with the system. The below conditions will apply:
- Debits may be effected from current, certain savings and transmission accounts. Debits to bond and subscription share accounts aren't permitted. - A max value ceiling of R5 000 per transaction is in place. The dividing of transactions to avoid the limit constraints isn't accepted. - All NAEDO payment instructions ought to be distinctively recognizable through the Agreement Reference as well as payment cycle.
Coverage of the NAEDO service
The NAEDO service includes a variety of accounts accepted through the NAEDO Service policies and which are held in the Common Monetary Area by collaborating banks. A list of collaborating banks can be acquired on application.
AEDO Service
The AEDO service is just like NAEDO in most respects, but can not be very easily challenged as the transaction is started with the customers card and pin. AEDO is an effective strategy to offset collection risk and failures on payment.
Bottom line
Examples of where EFT and NAEDO services can be utilised is offered inside my previous article. The AEDO service could effectively be utilized for collection in a situation when NAEDO may have been made use of.
About the Author:
Utilise a debit order service to collect payment from debtors and improve your business cash flow today. Tim is an expert in EFT collections.
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