Are debit orders still in the game?

From insurance and finance to telecoms, healthcare and entertainment, many industries rely on recurring payments to keep their businesses running. While debit order has primarily been the go-to method for efficient collections, according to our latest Consumer Payments Report, consumers are increasingly expressing preference to make recurring payments such as insurance premiums and loan repayments via alternative methods.

One reason for that is increasingly negative experiences with the way debit orders are managed and processed.

South Africa’s debit order system today is split between two rails: the legacy EFT debit system and its modern counterpart, DebiCheck. EFT debits have long been a staple, with 441 million transactions processed in 2024, second only to EFT credits. 

DebiCheck processed nearly half that amount - 218 million transactions. But that doesn’t mean it’s not performing. While EFT debit volumes are starting to decline, DebiCheck is growing at over 10% year on year. So, what’s driving this shift? And where does it leave the traditional debit order?

A closer look at consumer sentiment around debit orders

Few things frustrate consumers more than unexpected money leaving their accounts, and it shows. Sentiment around debit orders is overwhelmingly negative. Data highlighted in our consumer report, sourced from DataEQ, shows that 85% of online conversations about debit orders in the context of insurance premium payments express dissatisfaction, while only 2% are positive.

The common pain points are unauthorised debits, debits made post-cancellation, overcharging or payments going off on the wrong day. Consumers are more alert than ever to how and when money is being deducted from their bank accounts, and by whom. To rebuild trust and protect revenue, insurers and other businesses are increasingly turning to DebiCheck as a more secure and transparent alternative.

Getting the most out of DebiCheck

‍DebiCheck is designed to offer protection for both consumers and service providers through digitally authenticated and traceable mandates.  

When a DebiCheck collection is initiated, the customer is prompted by their bank to review and approve the mandate via a digital signature. Once accepted, the mandate is recorded by the bank and used to authorise future collections. This process not only makes it harder for customers to dispute payments, but also helps prevent unauthorised debits.

Still, DebiCheck is not a perfect solution on its own. Mandates can remain in limbo if a customer delays authentication, errors in the mandate or insufficient funds can also cause failures. Improper documentation and record-keeping can also result in failed collection attempts on cancelled or expired mandates. That’s why complementary processes are essential.

In a recent proof of concept with one of South Africa’s largest collections-based businesses, we analysed a set of collections the company had written off as uncollectible and implemented DebiCheck management processes to improve their success rates. We saw a 74% recovery rate on transactions previously considered uncollectible. So while DebiCheck provides a strong foundation for authorised payments, collections are optimised when supported by intelligent routing, robust mandate management and fallback options like Registered Mandates (RM).

Protect revenue with reliable collections

Stitch DebiCheck is built for businesses that need reliable, scalable and secure collections. To enable optimal collection rates, DebiCheck can be paired with alternative or fallback methods such as card or Pay by bank. 

With built-in support for TT3 mandates and Registered Mandates, Stitch gives enterprise businesses full control and visibility over the collections lifecycle. The result is faster settlements, fewer chargebacks and a more predictable cash flow.

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FAQs

Are debit orders still widely used in South Africa?

Yes. Debit orders remain a core payment method for recurring payments such as insurance premiums, subscriptions, and utilities.

Why do businesses still use debit orders?

Debit orders provide predictable collections, lower transaction costs, and are well suited to recurring billing models.

How have debit orders evolved over time?

Modern systems like DebiCheck have improved debit orders by adding upfront mandate verification and reducing fraud and disputes.

What are the limitations of debit orders?

Limitations include failed collections due to insufficient funds and slower settlement compared to real-time payment methods.

Which industries rely most on debit orders?

Insurance, lending, education, utilities, and subscription-based services rely heavily on debit orders.

How should businesses decide whether to use debit orders?

Businesses should consider customer preferences, payment reliability, compliance requirements, and whether debit orders fit their billing model.

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