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dimanche 18 août 2013

When To Employ AEDO, NAEDO Or EFT Debits To Acquire Cash

By Steven Isaacs


To be able to grasp which debit order option to use you'll initially have to have an understanding of the variances inside the three significant 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 most commonly used method, EFT. The EFT service is provided by many participating banks (eg. ABSA, FNB, Nedbank and Standard Bank), which allows businesses to process payments totally by computerised methods. The service can be utilised for both collecting payments from customers (EFT debits) as well as for paying (EFT credits). Payments can be made for salaries, creditors, wages etc. Your organization can lodge payments and collections by means of their bank to all contributing banks.

Transacting through the EFT service

Both debit and credits may be processed through the system.

The below conditions applies:

- Credits can be processed towards cheque, savings and transmission bank accounts, and within certain circumstances, bonds, loans and subscription share bank accounts. Transactions higher or equivalent to R5 million rand will never be allowed and will be homed back using the reason that it surpasses industry enforced restrictions. These kinds of transactions should be re-routed through the real time line and not the operator.

- Debits can be processed from current, certain savings and transmission accounts. Debits to bond and subscription share accounts aren't permitted. A highest value limit of R500,000 per transaction was in place. - The separating or dividing of transactions to stop limit constraints are not acceptable.

Coverage of the EFT service

The EFT service handles all sorts of accounts acceptable by way of the EFT service rules and which are held in the Common Monetary Area by participating banks. A directory of participating financial institutions is accessible on application.

NAEDO Service

The NAEDO service is provided by participating financial institutions (eg. ABSA, FNB, Nedbank and Standard Bank), which enables enterprises as well as other bodies to process repayments fully by computerised method. The service can be used for obtaining payments from customers (debits). NAEDO doesn't make provision for any credit facility and EFT credit might be employed if need be.

NAEDO payment instructions support multiple presentments thereof. If they're unpaid after the first presentment, credit tracking may be invoked. Credit monitoring is elective and if picked, the past due NAEDO payment instruction can automatically be represented during the mid-day of the same working day and for the successive number of days selected, twice daily, on business days until payment is received or until expiry of the monitoring interval selected.

All NAEDO repayment instructions, are randomised giving all users an equal chance of receiving payment and therefore are effected as close as is feasible after wage credits are paid into the banking accounts of consumers early in the day.

Transacting using the NAEDO service

Only debits may be processed through the system. The below conditions will apply:

- Debits may be processed from current, certain savings and transmission bank accounts. Debits to bond and subscription share accounts are not granted. - A highest possible value ceiling of R5 000 per transaction is in place. The breaking up of transactions to avoid the limit constraints is not allowed. - All NAEDO payment instructions must be uniquely recognizable by way of the Agreement Reference and repayment period.

Coverage of the NAEDO service

The NAEDO service covers a variety of bank accounts permitted by the NAEDO Service policies and which are kept in the Common Monetary Area by partnering banks. A listing of collaborating banking institutions is obtainable on request.

AEDO Service

The AEDO service is much like NAEDO in most respects, but cannot be very easily challenged because the transaction is initiated using the customers credit card and pin. AEDO is an effective approach to mitigate collection risk and failures on payment.

Conclusion

Examples of where EFT and NAEDO services can be employed is given in my previous article. The AEDO service could successfully be utilized for collection in any scenario when NAEDO could have been put to use.




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