Many people are hesitant to add debit orders to their financial management tools. Some well-publicised scams, in which fraudulent operators load debit orders onto bank accounts without authorisation from accountholders, have left this payment option with an unreliable reputation.
This is unfortunate, because South African banks have made significant progress in the fight against debit order fraud with DebiCheck. But more importantly, debit orders can offer several benefits if you want to plan and stick to a monthly budget.
The benefits of a debit order
When you sign a debit order or authorise one over the phone, you give a vendor or service provider consent to withdraw a certain amount of money from your account every month. It makes recurring payments like a cellphone subscription, gym membership, insurance, home loan, car loan and so on much simpler. You don’t have to carry cash or pay in person.
Since a debit order runs on the same day every month, you can set it for a date when you know there’ll be money in your account, such as payday. This removes the worry that you might miss a payment, or that the debit order will be rejected due to insufficient funds – both of which would have a negative impact on your credit score.
Cybercrime: Why you always need to stay alert
By 2019, too many South Africans were falling prey to debit order fraud. The problem with the so-called ‘R99 scam’ was that fraudsters would load debit orders of less than R100 on victims’ accounts. Accountholders weren’t notified when such a small debit order was loaded and cybercriminals knew this. It could take months or even years for clients to notice the small extra debits on their accounts every month.