To be able to grasp which debit order solution to use you should initially need to have an awareness of the variations with the three major collection solutions: Authenticated Early Debit Order (AEDO), Non-authenticated Early Debit Order (NAEDO) and Electronic Funds Transfer (EFT).
EFT Debits
We begin with the first and the most regularly used method, EFT. The EFT services are offered by several participating banks (eg. ABSA, FNB, Nedbank and Standard Bank), which in turn allows organizations to process payments entirely by computerised methods. The service may be used for both obtaining payments from customers (EFT debits) and for paying (EFT credits). Payments can be made for wages, creditors, paychecks etc. Your business may lodge payments and collections by way of their bank to all contributing banks.
Transacting via the EFT service
Either debit as well as credits can be processed through the system.
The subsequent conditions applies:
- Credits may be effected from current, savings and transmission accounts, and within specific situations, bonds, loans and subscription share bank accounts. Transactions larger or equal to R5 million rand will not be permitted and will be homed back using the reason that it exceeds sector enforced limits. Such transactions should be re-routed through the actual time lines but not the operator.
- Debits can be effected against cheque, certain savings and transmission accounts. Debits to bond and subscription share accounts are not permitted. A maximum value ceiling of R500,000 per transaction is in place. - The breaking up or splitting of transactions to avoid limit constraints are not acceptable.
Scope of the EFT service
The EFT service covers all types of accounts acceptable by way of the EFT service rules and which are kept in the Common Monetary Area by participating banking institutions. A list of participating banking institutions can be obtained on request.
NAEDO Service
The NAEDO service is provided by partnering banking institutions (eg. ABSA, FNB, Nedbank and Standard Bank), which permits enterprises and other bodies to process payments entirely by computerised methods. The service can be used for collecting payments from customers (debits). NAEDO doesn't make allowances for any credit facility and EFT credit will likely be implemented if needed.
NAEDO repayment guidelines aid multiple presentments thereof. If they're unpaid following the first presentment, credit tracking can be invoked. Credit tracking is optionally available and when selected, the past due NAEDO repayment instruction may be represented throughout the mid-day of the same day and for the successive amount of days selected, two times a day, on working days until payment is obtained or until expiration of the tracking interval selected.
All of the NAEDO repayment instructions, will be randomised providing all users an identical possibility of getting money and are effected as near as possible after wage credits are payed to the banking accounts of Customers early in the day.
Transacting using the NAEDO service
Only debits may be processed with the system. The below conditions will apply:
- Debits may be effected against current, certain savings and transmission accounts. Debits to bond and subscription share accounts are not permitted. - A highest value limit of R5 000 per transaction is in place. The splitting of transactions to avoid the limit constraints isn't accepted. - All NAEDO payment instructions should be uniquely discernable by way of the Agreement Reference and settlement cycle.
Coverage of the NAEDO service
The NAEDO service covers all types of bank accounts permitted by way of the NAEDO Service regulations and which are kept in the Common Monetary Area by collaborating financial institutions. A list of partnering banks can be acquired on application.
AEDO Service
The AEDO services are just like NAEDO in most respects, but cannot be very easily challenged because the transaction is established with the account holders credit card and pin. AEDO is an excellent strategy to offset collection risk and failures on payment.
Summary
Instances of where EFT and NAEDO services may be used is provided within my preceding article. The AEDO service could successfully be utilized for collection in a scenario whenever NAEDO may have been utilised.
EFT Debits
We begin with the first and the most regularly used method, EFT. The EFT services are offered by several participating banks (eg. ABSA, FNB, Nedbank and Standard Bank), which in turn allows organizations to process payments entirely by computerised methods. The service may be used for both obtaining payments from customers (EFT debits) and for paying (EFT credits). Payments can be made for wages, creditors, paychecks etc. Your business may lodge payments and collections by way of their bank to all contributing banks.
Transacting via the EFT service
Either debit as well as credits can be processed through the system.
The subsequent conditions applies:
- Credits may be effected from current, savings and transmission accounts, and within specific situations, bonds, loans and subscription share bank accounts. Transactions larger or equal to R5 million rand will not be permitted and will be homed back using the reason that it exceeds sector enforced limits. Such transactions should be re-routed through the actual time lines but not the operator.
- Debits can be effected against cheque, certain savings and transmission accounts. Debits to bond and subscription share accounts are not permitted. A maximum value ceiling of R500,000 per transaction is in place. - The breaking up or splitting of transactions to avoid limit constraints are not acceptable.
Scope of the EFT service
The EFT service covers all types of accounts acceptable by way of the EFT service rules and which are kept in the Common Monetary Area by participating banking institutions. A list of participating banking institutions can be obtained on request.
NAEDO Service
The NAEDO service is provided by partnering banking institutions (eg. ABSA, FNB, Nedbank and Standard Bank), which permits enterprises and other bodies to process payments entirely by computerised methods. The service can be used for collecting payments from customers (debits). NAEDO doesn't make allowances for any credit facility and EFT credit will likely be implemented if needed.
NAEDO repayment guidelines aid multiple presentments thereof. If they're unpaid following the first presentment, credit tracking can be invoked. Credit tracking is optionally available and when selected, the past due NAEDO repayment instruction may be represented throughout the mid-day of the same day and for the successive amount of days selected, two times a day, on working days until payment is obtained or until expiration of the tracking interval selected.
All of the NAEDO repayment instructions, will be randomised providing all users an identical possibility of getting money and are effected as near as possible after wage credits are payed to the banking accounts of Customers early in the day.
Transacting using the NAEDO service
Only debits may be processed with the system. The below conditions will apply:
- Debits may be effected against current, certain savings and transmission accounts. Debits to bond and subscription share accounts are not permitted. - A highest value limit of R5 000 per transaction is in place. The splitting of transactions to avoid the limit constraints isn't accepted. - All NAEDO payment instructions should be uniquely discernable by way of the Agreement Reference and settlement cycle.
Coverage of the NAEDO service
The NAEDO service covers all types of bank accounts permitted by way of the NAEDO Service regulations and which are kept in the Common Monetary Area by collaborating financial institutions. A list of partnering banks can be acquired on application.
AEDO Service
The AEDO services are just like NAEDO in most respects, but cannot be very easily challenged because the transaction is established with the account holders credit card and pin. AEDO is an excellent strategy to offset collection risk and failures on payment.
Summary
Instances of where EFT and NAEDO services may be used is provided within my preceding article. The AEDO service could successfully be utilized for collection in a scenario whenever NAEDO may have been utilised.
About the Author:
Utilise debit orders to collect payment from debtors and improve your business cash flow today. Debby is an expert in NAEDO debits.
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