New penalties for the originators of unauthorised debit orders “may go a long way to curb fraud in the industry”.

While SmartCollect’s managing director Fred Steffers had “certain reservations” about the fines system‚ he said “it will certainly help to weed out the criminal element which has infiltrated the debit order industry”.

Fines of up to R1000 per unauthorised debit order will be imposed the Payments Association of South Africa (Pasa)‚ an industry watchdog.

Steffers said the fines will be levied against banks “who will in turn pass them on to payment systems companies who will then forward them to their users”.

“The danger exists that if a massive fine is levied against a particular user‚ they may simply close their doors and disappear‚” Steffers said.

“An unintended consequence is going to be the fact that it is going to have an extremely negative impact on ethical payments systems companies such as ourselves because it is inevitable that a very small percentage of debit orders sent to us by our users are problematic for a variety of reasons including fraud.”

Pasa CEO Walter Volker‚ however‚ said the new rules were not aimed at honest operators.

“We know from years of experience who the ethical and honest operators in the payment systems arena are and these rules are definitely not aimed at them‚” Volker said.

“What we are seeking to do is to put fraudsters out of business and to offer the maximum amount of protection to the 25 million consumers who use debit orders on a monthly basis.”

Voeckler said the sheer volume of transactions processed every month made it “impossible for companies…to verify that the mandates on every debit order sent for processing by call centres was valid”.

He added that all the “major payments systems companies…have gone to great lengths to weed out the bad apples but is inevitable that a number of problematic debit orders slip through the gaps and this could end up costing payments system companies a great deal of money in fines”.