Introduction to Direct Debit Service

1. Introduction to Direct Debit Service EG-ACH Direct Debit

2. EG-ACH Introduction • The Egyptian Automatic Clearing House (EG-ACH) is a nationwide Electronic Funds Transfer (EFT) network. • EG-ACH processes batches of interbank Credit and Debit transactions. • EG-ACH facilitates a wide range of Customer to Customer (C2C) payments such as salary distribution, supplier payment, governmental payments, pension distribution and many more.

3. CBE - Payment and Settlement Systems • In its effort to develop payment systems in Egypt, • CBE has established Real Time Gross Settlement (RTGS) system for large value payments, • CBE has assigned EBC with the development of the Automated Clearing House (ACH) system for Bulk small value payments. EBC Role Central Bank of Egypt CBE Role RTGS CCH EGP ACH 123 Banks Banks Mobile ACH USD, EURO

4. EG-ACH Direct Debit Service • Payment scheme governed by EBC to facilitates payment collections. • Permits billers to collect recurring amount due from their customers at their banks by initiating direct debit transaction. • Banks are not responsible for any underlying contract between biller and their customers as it is solely an early collection method. • Based on a written authorization given by customers to biller for the debit of their accounts; this written authorization named Direct Debit Mandate.

5. Definitions and Interpretation • Debtor (Customer or Payer) • Creditor (Biller or Originator) • Debtor bank (Customer bank) • Creditor bank (Biller bank)

6. Direct Debit Workflow Creditor Bank Debtor Bank Creditor Debtor RTGS • Billers • Company • Individual Fund Movement

7. Definitions and Interpretation • Mandate Processor: • Receives the signed mandate from the debtor, dematerializes the mandate, archives a scanned copy of the mandate and forwards the electronic mandate information to EBC and send the physical mandate to the debtor bank. • Third Party Processor: • Delivers direct debit transactions to EG-ACH on behalf of originator banks.

8. What about the Direct Debit Mandate • Direct Debit Mandate (DDM) should be approved by the Debtor Bank prior to direct debit transaction initiation. • EBC has taken the responsibility of providing mandate centralized screening system “Mandate Portal” with following features: • Host all direct debit mandates in an electronic form (e-mandate) • Screen each direct debit transaction against the respective mandate • Allowing the debtor bank to activate/deactivate particular mandate • Mandate Portal: • A central hub for mandate business workflow which facilitates collecting and routing the dematerialized Mandates between the different parties

9. Direct Debit Mandate Types • Irrevocable Mandate • Irrevocable transactions • Payment frequency as per contract terms and conditions • Could be canceled based on mutual agreement between Debtor and Creditor • Revocable Mandate • Revocable transactions • Payment frequency is required (Monthly, Quarterly, Semi-Annual, Annual) • Could be canceled upon Debtor request

10. Direct Debit Mandate Initiation Mandate Processor Dematerialize Mandate Portal Fill Mandate Payer Archive Activate ACK. Debtor Bank Packing Biller Deliver Physical Mandate Send Courier

11. Direct Debit Workflow & Screening Creditor Bank Debtor Bank Mandate Portal Creditor Debtor • Billers • Corporate • Individual RTGS Fund Movement

12. Direct Debit Participants • EBC • Third Party Processor • Mandate Processor • Creditor Bank • Debtor Bank • Scheme Owner and Operator • Work on behalf the banks • Collect mandates • Host debtor account • Host creditor account • Mandate Portal Provider • Send DD transactions • Dematerialize mandates • Activate Mandate • DD transaction initiator • Screening • Receive DD transactions • Archive mandates • Clearing and Settlement • Send mandates to debtor bank

13. Direct Debit Participants • EBC • The scheme owner; defines the rules for the use and certifies parties participating in the scheme (banks mandate processor and third party processors) • The clearing house • Mandate Portal • The mandates are checked every time a direct debit is done • Debtor Bank • Will debit the account of the debtor when an accepted direct debit occurs • Debtor • A debtor is the party whose bank account is to be debited as instructed in a DDM, typically a customer of a biller. • The debtor is able to revoke a direct debit transaction within 180 days after settlement date for bill payment only, revocation is not applicable for any installment payment.

14. Direct Debit Participants (Cont.) • Creditor Bank • Will credit the account of the Creditor when a direct debit is accepted and settled by the clearing house • The Creditor bank is liable towards the scheme owner for any revoked transaction. • The Creditor bank has a direct debit contract with the biller • Creditor • A biller with a direct debit contract can send a direct debit file to the creditor bank • The Creditor receives from Mandate Processor the mandates which are accepted by debtor bank • The Creditor is liable towards the Creditor bank