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Bank accounts may be linked to mobile numbers

SA monitoring new payment systems implemented in Australia and Europe.

The linking of bank accounts to easy-to-remember identifiers such as mobile numbers and email addresses is said to be considered in an overhaul of the National Payments System.

Industry stakeholders– including the central bank, commercial banks, payments association and facilitator of interbank settlements – are working to upgrade the current system, developed in the 1980s, as previously reported by Moneyweb.   

The various stakeholders are understood to have carried out a two-day meeting among themselves last week to explore options and discuss the scope of the planned upgrade.

Carlo Palmers, head of Market Infrastructures at SWIFT, told Moneyweb that the South African team is closely monitoring new payment systems implemented in a number of countries, with a particular focus on the new payments platform that went live in Australia last month.

“Australia has very consciously rethought their project from looking just at instant payments to a new payments platform. A new payments platform means that they are building a new infrastructure that can cater for any type of transaction so instant payments and many other transaction types would go through the system,” he explained.

Enabling instant payments, or at least reducing transaction processing speeds, is a consideration in South Africa. This is in line with retail market expectations, driven by consumers’ ability to purchase and pay for goods online almost instantaneously. 

Another consideration is the linking of bank accounts to mobile numbers and email addresses, which is a key feature of the Australian system. The system allows consumers to make payments to each other using mobile numbers and email addresses instead of a bank account number, which can be complicated and difficult to remember.

To make use of the Australian system, account holders must register their personal information on a proxy database, which forms the link between mobile number and/or email address and bank account, all while shielding underlying bank account numbers. Only account holders may link their bank account number to their mobile number and email address and the proxy database has the “highest level of security”, Palmers said in response to questions about linking publicly-available information to bank account numbers.

He said the South African banking community is exploring  a similar system using easy-to-remember mobile account numbers in lieu of bank account numbers to help boost financial inclusion. Mobile research group GSMA found that South Africa had a 68% mobile penetration rate in 2016 while a separate study by FinScope laid bare the extent of financial exclusion in the country.  According to the 2016 study South Africa appears financially inclusive on the surface as 77% of adults are banked but if South Africa Social Security Agency (Sassa) card holders are excluded only 58% of adults are in fact banked. It also found that 11% of the adult population is entirely excluded from the financial system.

An upgraded system could also provide the country with a way to “support the official economy” by reducing the amount of cash in circulation and therefore cash used in suspicious transactions. This has worked well in Sweden, which is aiming to become an entirely cashless society. 

Based on his experience with SWIFT building payments systems across the world, Palmers said the all-encompassing nature of the South African team and open-minded approach to overhauling the system is very promising.

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If we want to overhaul our payment system, START with the debit order process. It is not acceptable that my bank would receive and proces a deduction from my bank account because a member of their little club requested it.

If the acclunt holder does not explicitly authorise a payment, the bank should not permit it. If some business does not get paid, they are free to follow the legal system to extract payment from their client, much as I would have to follow if I had a claim that they did not perform on some aspect of our commercial contract.

You authorized your supplier to recover the agreed premium from your bank, so the bank is merely a collection agent when the debit is processed. So if you are unhappy either cancel the debit order or place a stop payment against it

@grahamcr

I think you did not get the full picture.

PASA (payment association of SA) sends, to the banks, fraudulent unauthorized debit orders to be processed. The banks a obliged to process these unauthorized debit orders.

Search for NAEDO debit orders on Hello Peter and you will find that the extent of the problem is vast and is with us for years. The banks simply shrugs their shoulders. PASA seems like a mafia organisation that does zilch.

To add to Muks’ comment, many of those who process unauthorised debit orders put through amounts of R99.00 knowing that banks generally only send SMS notifications for amounts of R100 plus.

Graham:

Sure, but there are today many ways for people to set up repetitive payments, or have a system much like SARS EFiling works (a payment request is loaded that the account holder has to authorise)

The bank does not even check with you whether you signed up for a debit order

The way this nonsense works is that if you sign up 12 months with Acme for 199 per month for say internet service, and they do not perform, Acme simply carries on the debit order and often for slightly changing amounts.

Withholding payment is often the only recourse a dissatisfied customer has. The banks take that away so now you must sue MegaCorp for non-performance

Agreed. Just look at the number of queried debit orders every month – just imagine the telephone and labour costs involved! A simple page on your internet banking account – where the bank lists all the debit orders against your account and a tick box next to each that you simply can ‘untick’ if you no longer want the party to take the debit order from you – would be great and also a simple solution.

Why do you assume that everyone has an internet banking account? Many elderly people are not online, or, if they are, they are not comfortable with banking online. And, what about the poor? They can’t afford computers or even smartphones with banking apps.

Must say that this simply looks like a 3rd party using your details to mediate transactions. I don’t see the value of this additional security risk compared to simply memorising my account number.

I fully agree, START with the debit order process.
The current debit order ‘system’ allows the deduction of money from my account for debit orders that I did not approve.
It become my problem if the bank allows the unauthorized deduction of money from my account – with the bank saying they are just ‘agents’? So the bank is an agent for unauthorized debit orders?

This is very similar to the cellphone WASPs arrangement…

Will this work for people who want to keep multiple mobile numbers, such as for work and private, or for adults who RICA a SIM on behalf of a minor? For that matter, will it work for those who choose to keep multiple bank accounts for different purposes?

You would have to explicitly associate the phone number or email address with a specific bank account. It wouldn’t be automatic

In what may seem unrelated matter, the banks can also submit your name or ID number to South African Fraud Prevention Service (SAFPS) to be listed as a fraudster, even if in error. Once listed you’ll have to wait ten (10) years for your name to be cleared even if they rectify the listing from fraudster to victim (in a case where you were the victim). The SAFPS does NOT request proof (court judgement or admission of guilt, etc) from the bank that the person in question is indeed “worthy” of listing.

Capitec has had that technology for a while now, even though it’s only available on their bank accounts. Most banks are afraid they would loose their Unique identifier and clients will have bank account options that could loose them revenue.

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