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- South Africa’s financial regulators issued a stern warning against “instant EFT” online payment systems on Thursday.
- The system is an alternative to payment by credit card and is used by the main providers.
- But it is fundamentally unsafe, says the Reserve Bank and Financial Sector Conduct Authority, leaving consumers exposed to fraud and without recourse if things go wrong.
- Stick with credit or debit cards, regulators say.
- For more stories, visit www.BusinessInsider.co.za.
South African consumers should “be aware of the risks associated with using online instant electronic funds transfer (EFT) payment services offered in e-commerce stores,” the Reserve Bank of South Africa warned on Thursday. and the Financial Sector Conduct Authority (FSCA).
Although they stopped short of advising consumers never to use such instant EFT systems, regulators said consumers should talk to their banks “before proceeding with something marketed and disguised under the premise of convenience”, and should stick with “supported solutions. by the industry, such as paying with their cards (debit or credit cards) “
Instant EFT is an option offered by large third-party payment processors and is accepted by major online retailers. It is sometimes marketed to avoid the hassle of card payment, or targeted at those who do not have one, while offering merchants payment security without having to wait for funds to clear.
But it relies on screen scraping, “which makes it possible for third parties to access bank account data and automate actions on behalf of a consumer using that consumer’s online banking access credentials,” regulators said. carries several risks.
- “Consumers have no control over how the third party accesses and uses their credentials and any other personal data or information (for example, account numbers and account statements may be stored and used without the consumer’s knowledge or consent).”
- “Dishonest entities can impersonate third parties offering instant EFT services on bogus e-commerce sites to capture consumer access credentials to their banks’ Internet banking websites. Thereafter, such entities can impersonate go through the consumer and perform any activity that the consumer has access to.a on their online banking platform (for example, making payments to themselves in real time, requesting a personal loan, increasing transaction limits and, in last instance, initiating payments to mule accounts) “.
- “Payments by electronic funds transfer are final and irrevocable in nature, and consumers cannot file disputes to reverse a transaction in the event that the online store does not comply with its agreement (for example, not delivering the products or delivering products counterfeit) “.
By handing over the online banking details to a third party, the payer may be in breach of the terms and conditions agreed upon with their bank, regulators said. That, in turn, can mean that they have effectively waived “their rights of recourse and any legal protections in the event of fraud and / or subsequent loss.”
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