As the world becomes increasingly digitised, so does the way we authenticate and authorise financial transactions. One trend that has been gaining traction globally is the centralising/digitising of mandates, where rather than relying on physical or image-based mandates, financial institutions can utilise authenticated electronic mandates for payment authorisation.
One example of this is the Debicheck system in South Africa, which was introduced in 2019 as a way to combat payment fraud and ensure that the account holder authorises all debit orders. Under Debicheck, a customer’s mandate is stored electronically and authenticated with their bank before processing the debit order, ensuring that only authorised transactions are processed.
But Debicheck is not the only example of centralising/digitising mandates. Similar systems are being developed and implemented worldwide, aiming to improve payment security, reduce fraud, and streamline payment authorisation processes.
How exactly do centralised/digitised mandates work? Instead of relying on physical mandates or images, customers can provide their authorisation electronically through an authenticated mandate. This mandate is stored electronically by the financial institution and can be accessed and authenticated at any time, providing a secure and efficient way of authorising payments. One of the major advantages of centralised/digitised mandates is their increased security level. With physical mandates, there is always a risk of fraud or unauthorised access. Still, with authenticated electronic mandates, financial institutions can be sure that only authorised parties are able to access and authorise payments.
Additionally, digitising mandates can streamline payment authorisation processes, reducing the time and effort required to authorise payments. This can help to improve overall efficiency and reduce the risk of errors or delays.
Of course, there are still challenges to be overcome in the centralising/digitising of mandates. One potential issue is the need for standardisation across financial institutions to ensure that mandates can be easily authenticated and accessed across different systems. There is also a need to ensure that the mandate itself is secure and tamper-proof to prevent unauthorised changes or access.
Despite these challenges, the trend towards centralising/digitising of mandates is likely to continue as financial institutions seek to improve payment security and streamline payment authorisation processes. Whether through systems like Debicheck or similar technologies, the future of payment authentication will likely be increasingly digitised and centralised.
The centralising/digitising of mandates represents an important trend in the world of payment authentication, with the potential to improve security, efficiency, and customer experience. While there are still challenges to be overcome, the benefits of authenticated electronic mandates are clear, and we can expect to see more financial institutions adopting these systems in the years to come.
