Introduction
Direct debit from NIBSS is one of the most reliable payment methods that Lendsqr supports. This is available to all lenders except for those on the free plan. Notably, NIBSS Direct Debit distinguishes itself from Remita DD in that it automatically sends mandates to the bank for seamless approval, eliminating the need for physical submission.
While the direct debit method is reliable for payments, it’s not suitable for all products. For example, because of the minimum fee charge, this payment method is most suitable for larger loan amounts. Transactions below N5,000 would not be cost-effective.
Setting up your NIBSS direct debit
Receiving payments with NIBSS direct debit is very simple to set up.
You would need to configure your global direct provider to NIBSS direct debit from the preferences tab on the Lendsqr admin console. However, if you have an alternate provider, such as Remita, as your global direct debit provider, you can configure NIBSS direct debit for specific products. This will override your global settings.
Then you need to configure your product payment method during set up to require direct debit. At this time, because you have specified NIBSS to be a direct debit provider, this will now be available for selection as a payment method.
What to expect after a direct debit has been selected as a repayment method.
Once direct debit is set up for your loan products, your customers will be required to activate their direct debit during their loan request journey. On the web app, your customers would be able to use a signature pad or upload their scanned signature. For mobile app customers, they may get an email that links to a web page where they can upload their scanned signature or sign on a signature pad.
After the mandate has been signed and submitted, the mandate is routed automatically to the bank for activation. While we await the bank activation, the loan status is fixed on Pending mandate approval and can not be rejected nor approved until the mandate has been processed by the bank.
Each bank processes mandates in different ways but all of them have the same fundamental principles of KYC review of mandates submitted. While some banks will use the signature comparison to approve the mandate, the majority of banks will call the customers to reconfirm the mandates. Most banks take 24-72 hours to process a mandate. Any mandate that has not been approved after this period will likely be declined by the bank. Loan requests will be automatically canceled on the Lendsqr admin console, if the bank declines the mandate.
Once the mandate is approved by the bank, the mandate then becomes available for debit. This is when the loan application can be approved by the lender.
Common reasons why mandates are declined by the bank
The customer’s account is dormant: Customers whose accounts are dormant cannot have their direct debit authorized. The customer may have to visit their banks to revalidate their bank accounts or use another bank account. From a risk perspective, a customer who is trying to add a dormant for a direct debit mandate is suspicious.
The customers cannot be reached by phone for confirmation. Most banks will try to contact the customer by phone to validate their direct debit mandate authorization and if they are not able to speak with the customer, the authorization request would be declined by the bank.
The customer’s signature is irregular or wrong. Banks always check customer signatures on the mandate against the signature they have on file. If these do not match, the bank will decline the request.
What to do if a mandate is not approved by the bank on time
Sometimes, banks take a long time to get around to approve mandates. While some banks can be as quick as a few hours, some banks may take days or even weeks.
Consequently, lenders should engage with their customers to call their account officers or relationship managers. The RMs can they engage with the relevant team to expedite approval process.
The customer must always ensure that they provide the RM with the mandate reference number which is usually in the form of RC0000000/0000/0000000000 where 0 here is usually a number.
Every bank has a different process of how they manage mandates. For example, some banks may do this centrally while others manage this from branches. Customers would need to engage with their respective banks.