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When you should employ AEDO, NAEDO or EFT debits to collect funds



In order to understand which debit order solution to make use of you should initially have to have an understanding of the differences in the three significant collection solutions: Authenticated Early Debit Order (AEDO), Non-authenticated Early Debit Order (NAEDO) and Electronic Funds Transfer (EFT).

EFT Service

We begin with the eldest and the most commonly used method, EFT. The EFT service is provided by quite a few contributing banks (eg. ABSA, FNB, Nedbank and Standard Bank), which allows enterprises to process payments entirely by computerised means. The service may be used for both recovering payments from customers (EFT debits) and also for making payments (EFT credits). Payments can be done for wages, creditors, wages etc. Your organization can lodge payments and collections by means of their bank to all contributing banks.

Transacting through the EFT service

Either debit and credits may be processed from the system.

The next few conditions applies:

- Credits may be processed towards cheque, savings and transmission accounts, and within certain circumstances, bonds, loans and subscription share bank accounts. Transactions larger or equivalent to R5 million rand will not be allowed and will be homed back using the reason it exceeds market imposed restraints. These kinds of transactions should be routed via the real time lines and not the operator.

- Debits can be processed against current, certain savings and transmission accounts. Debits to bond and monthly subscription share accounts aren't allowed. A maximum value ceiling of R500,000 per transaction is in place. - The breaking up or dividing of transactions to prevent limit restrictions are not authorized.

Coverage of the EFT service

The EFT service covers all kinds of accounts permitted by way of the EFT service rules and which are kept in the Common Monetary Area by collaborating banking institutions. A listing of collaborating financial institutions can be acquired on application.

NAEDO Service

The NAEDO service is supplied by partnering financial institutions (eg. ABSA, FNB, Nedbank and Standard Bank), which allows companies and other bodies to collect repayments totally by computerised method. The service can be used for obtaining repayments from consumers (debits). NAEDO does not make provision for a credit facility and EFT credit will probably be implemented if needed.

NAEDO repayment instructions support numerous presentments thereof. If these are unpaid following the first presentment, credit tracking can be invoked. Credit tracking is elective and if picked, the unpaid NAEDO repayment instruction may be represented during the mid-day of the same working day and for the sequential amount of days selected, twice a day, on business days until payment is obtained or until expiry of the monitoring period chosen.

All of the NAEDO payment instructions, will be randomised giving all users an identical possibility of receiving payment and are effected as close as is possible after wage credits are payed in to the bank accounts of consumers early in the day.

Transacting via the NAEDO service

Merely debits may be processed via the system. The following criteria will apply:

- Debits can be processed from cheque, certain savings and transmission 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 splitting of transactions to prevent the limit constraints isn't acceptable. - All NAEDO payment instructions must be uniquely recognizable by the Agreement Reference and also the payment period.

Coverage of the NAEDO service

The NAEDO service covers a variety of bank accounts permitted through the NAEDO Service rules and which are held in the Common Monetary Area by partnering banking institutions. A list of collaborating banking institutions is accessible on request.

AEDO Service

The AEDO service is much like NAEDO in all respects, but can't be very easily questioned as the transaction is started with the customers credit card and pin. AEDO is an excellent strategy to minimize collection risk and defaults on payment.

Bottom line

Examples of where EFT and NAEDO services can be utilized is offered within my preceding article. The AEDO service could efficiently be used for collection in any circumstance when NAEDO could have been made use of.



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