Authorization to debit account letter a letter
written to the Bank by an owner or a Signatory of a bank account to allow the
bank do transactions on the account. If you wish to give a third party the
power of attorney to a to manage your banking account, you must write a letter
of authorization to debit account and send it to your banker.
---------------- ---------------------
-------------------- -------------------------
An
authorization to debit account letter, authorizes the holder to debit
transaction on the specified account and could be explained in a similar way to
a 'Buy Now' button on a
website.
What
happens behind the scenes is a process that sort off simulates the
authorization to debit account letter and you’ve probably also asked yourself, how
the dots connect to each other when one clicks on the ‘Buy’ link on a website?
Well, when one makes a purchase using a credit/ debit card, a card authorization
to debit account request is sent to the bank, this is done so that the card
sending the request is able to prove authenticity and validity with the bank.
Whenever
an account is effected by a credit or debit transaction, the merchant account
will send a request to debit for said transaction to the acquiring bank,
through (Authorization to Debit Account) a card processing agent, such as a
verified payment gateway. The financial institution that maintains the
merchant’s bank account sends through to the issuer a request to review its client’s
records, to find out if indeed the client is who he says he is and that they
are using a validated card, while also checking whether or not they have the
requested funds that are desired in order to fulfill the payment.
If
the funds are found to be sufficient and are able to fulfill the requested
amount for the transaction, an authorization to debit account hold is effected
on the requested amount from the account of the customer, which in turn means
that their credit account is also reduced by an amount which is equivalent to
that of the purchase. This in return results in the acquirer getting an approval
or error message. like you might have already guessed, in the event that an
insufficient funds message is received, the requested transaction will not be
completed. This would be the equivalent to a holder of the Authorization to
Debit Account letter finding that the account they have been authorized to
debit has no monies.
An
Authorization to Debit Account letter will help you to protect your money if
you need to debit monies from a customer’s account this letter is used to
instruct the issuing bank to place a hold on the money so that it is available
for you to debit.
By
placing a hold on monies effected by the authorization to debit account for
credit or debit account transactions, the merchant can safeguard his/her
business against fraud and unnecessary chargebacks. In the event of such
dealing, they are able to quickly block the funds in order to verify them, thus
ensuring that they get their payment for the purchase.
What
happens with the authorization to debit account hold? First of all, this is
removed once the merchant confirmed that the due amount has been recorded or authorization
reaches its expiry date (mostly five days). Placing a temporary hold on the
customer’s account provides the acquirer a certain timeframe in which to validate
and so record the amount (via merchant) to fulfill the transaction.
This
is how the processes and cogs turn when an authorization to debit account is
unsuccessful.
Most
payment gateways apprize on-line customers regarding these failures
mechanically by displaying an explicit message regarding why their action
wasn’t successful. While on the other side, the merchant is able to view the root
of the unsuccessful transaction as showed by the error message. The message
displaying the error may vary in accordance with the type of error being
experienced. There are codes for technical problems or issues with the data that
has been transferred to the processing unit, an incorrect configuration may occur
while processing, the might be an incorrect value while filling in the checkout
details, and so forth. However, in usual cases, error messages or alerts are in
most cases with regards to a customer’s account having insufficient funds.
An
Authorization to Debit Account letter does pretty much the same thing for the
holder (the holder of the letter would be the merchant in this explanation) as
the acquirer does for the merchant.
---------------- ---------------------
-------------------- -------------------------
debit
ˈdɛbit/
noun
noun:
debit; plural noun: debits
1.1.
an
entry capturing the amount owed, this is normally listed on the left-hand side
or column of an account.
"a
double-entry system of clerking, where each debit has a corresponding credit
entry"
o a payment made or owed.
"a
further withdrawal of £21 060 60 had been received from the Railway
Department"
verb
verb:
debit; third person present: debits; past tense: debited; past participle:
debited; gerund or present participle: debiting
1.1.
(of
a bank or another monetary organization) take away (a quantity of money) from a
customer's account.
"$10,000
was debited from their account"
o remove an amount of money from (a bank
account).
"cash
terminals automatically debit a customer's bank account"
Authorization
to Debit Account for Bank
You cannot complete your banking formalities for
various reasons. You have the option of giving a power of attorney to a trusted
person to act legally on your behalf and complete your banking formalities for
you. You must indicate your personal information in the letter and then
indicate the surnames, forenames and addresses of the proxy holder (s).
Attached to your letter must be a photocopy of either side of the identity
cards of the 2 persons involved with the power of attorney for banking. The
sending of your mail should be addressed to your bank branch, for your banker,
by registered mail with acknowledgement of receipt.