The basic functionality is of the NuPay system is to provide a facility whereby a Credit Provider can process an electronic transaction to make a transfer from a client's account to his own account, similar to what is currently being done with credit and debit card transactions. The difference is that, due to the lack of funds in the client's account, this transaction must be processed at a later value date. This is done without the retention of the client's ATM card or his PIN.

Basic Principles

This method of payment will primarily be used in instances where payees operate a savings, transmission or cheque account with no credit facilities. The required payment can consist of single or multiple installments. The solution is based on the principles applied in magnetic stripe based debit cards.

The actual steps in the electronic processing of the transaction can be described as follows:

  • The person requiring the loan goes to the Credit Provider and requests the loan.
  • The Credit Provider would go through their normal evaluation and credit vetting processes.
  • The borrower agrees to repayment of the loan by means of an electronic bill payment.
  • The Credit Provider calculates the total cost of the loan, including the interest for the term of the loan.
  • The Credit Provider will input the details in respect of the transaction on the merchant terminal.
  • The merchant terminal will connect through the existing Telkom x.25 network, connecting with Speedlink or a radio pad.
  • Transactions will only be recorded for processing if the cardholder is present during the initiation of the transaction and has authorized the transaction by entering the correct PIN on the security keypad. The Credit Provider does not have to retain the client's ATM card or have any knowledge of the client's PIN.
  • The transaction will be routed via a central processing server, utilizing the existing electronic banking software and network, to the bank's PIN verification server. The transactions adhere to all existing international standards for security of data, which include the encryption of the PIN.
  • The transaction consists of two components. The first component will be an authorization request enquiry and the second component the actual post dated transaction. The reason for the first component is to verify the PIN with the issuer.
  • After verification of the PIN, the transaction will be passed back to the central processing server. A MAC (Message Authentication Code) will be stored with the transaction in encrypted format.
  • On the specified date, the transaction will be presented for payment with the MAC as authorization.
  • Should the transaction not be completed successfully within the agreed parameters, the Credit Provider will be notified accordingly for follow up action. Reports at the central processing server provide the beneficiaries with information with regards to monies outstanding at the various value dates, as well as processed transactions.
  • Money collected will be transferred to the individual account with the same day value date.

Advantages of NuPay over other repayments methods

  • Debit orders can be reversed by the client at any time within 90 days after being transacted successfully. NuPay is a PIN based authorization method and therefore transactions are irreversible.
  • NuPay transactions take place in the early morning after the ACB credits have run. Debit orders are the last transactions to be processed in the business day (account holder may withdraw the cash in the day).
  • The Credit Provider would only have the results of debit orders 48 hours after processing. The NuPay web site is updated immediately after the transactions have been processed and can be accessed to see the results.
  • Failed debit orders carry a cost of up R95.00 to the account holder and up to R50.00 to the Credit Provider. NuPay does not charge a fee for failed transactions.
  • Debit orders are only presented once for payment and if there are not sufficient funds it fails, whereas NuPay is submitted on four consecutive days.

Advantages to parties involved

The system provides major advantages to all the parties concerned.


  • An uncomplicated and secured system for providing pushed transactions from client's accounts.
  • Banks do not have to develop a solution, which would only be applicable to their own clients.
  • The client's PIN will not be disclosed to third parties, reducing the risk of fraudulent transactions.
  • Less cash handling at both ATM's and over the counter transactions.
  • No administration required on reversal of failed transactions, transactions only processed if funds are available.

Credit Provider

  • The system provides for a suitable alternative to the practice of retaining the client's ATM card and PIN. No new or additional risks will be introduced by this system. . The clients potentially only require one system to handle the clients of different banks.
  • The risk in the current practice of cash withdrawals and subsequent cash handling is reduced.
  • The existing restrictions on volume are reduced, which allows for more cost effective operations.
  • Feedback on transactions is available early in the morning via the NuPay website.
  • The NuPay mini statement details the exposure of a client on NuPay, enabling better credit vetting.


  • The consumer no longer needs to disclose his/her PIN to a third party. This reduces the possibility of misuse of the client's card and PIN.
  • The reduced cost of handling the transactions allows for effective service at a lower cost of credit. The total cost of the transaction is still substantially less than the previous margins charged.
  • The clients can continue using their ATM card in the way it was intended.
  • Provision can be made for the repayment of loans over an extended period, rather than a single repayment. This allows for more flexibility of repayment structuring.