Nigerian fintech company, Paystack on Thursday announced that it has partnered with the Nigeria Inter-Bank Settlement System (NIBSS) to launch Paystack Direct Debit, a digital solution that enables businesses to securely debit customers' bank accounts in Nigeria.
"In conversation with merchants, we heard that businesses that collect frequent repeat payments from customers needed a way to access customers’ bank accounts directly, in a way that was convenient and secure. We built Direct Debit in response," Paystack product managers, Osaro Aiwekhoe and Yinka Adewuyi, said in a statement seen by Bendada.com.
With the Paystack Direct Debit, users will be able to pay for recurring expenses such as Spotify and Netflix subscriptions automatically and without a debit card thereby reducing costs related to card transactions. Over 20 Nigerian banks have been integrated into the solution, according to Paystack.
The initiation of Direct Debit in Nigeria took the form of "Debit Notes" in paper format, facilitated by the payer's bank through the Nigeria Clearing House infrastructure. The Automated Clearing House, established in 2002, introduced the Nigerian Electronic Funds Transfer (NEFT) to the market. NIBSS owns and oversees the physical infrastructure for clearing cheques and paperless clearing instruments in Nigeria.
Formally incorporated into the Nigerian Clearing System by NIBSS in January 2006, Direct Debit emerged as a product, acting as a variant of NEFT. Participating banks, operating under the Nigeria bankers clearing house, implemented and managed this system.
Here's how merchants and consumers can use the Paystack Direct Debit:
- Ask your customer to connect their bank account to your business.
- For confirmation, the customer transfers a nominal amount to a bank account number provided by NIBSS.
- After the bank transfer is verified, a mandate is established, connecting the customer's bank account to your business. This empowers you to initiate both one-time and recurring payments through Paystack, as per the agreed-upon terms with the customer.