Paperless Direct Debit
Paperless Direct Debit enables organisations to sign up customers for Direct Debit collections over the telephone, Internet, telephone keypad, face to face or interactive TV.
It speeds up and simplifies the sign up process, whilst at the same time further increasing an organisation's administrative cost savings. It is more convenient for customers too, with no forms to complete or the possibility of delays.
The organisation obtains the customer's bank account details and then lodges the Direct Debit Instruction with that bank via AUDDIS. Paperless Direct Debit is therefore only available to organisations using the AUDDIS service and who can satisfy additional criteria.
Prior to joining Paperless Direct Debit, organisations need to be aware of the associated additional risks involved in using the service, as follows:
- it is the organisation's responsibility to verify the customer and validate their details for example identity, account details, customer address. A number of software packages are available to assist in this process, details are available from the document library.
- originators cannot counter claim following receipt of an indemnity claim for the reason 'payer disputes having given authority'
- organisations must be aware that there may be an impact on future business if Direct Debit ceases to be the preferred payment method for customers
- the organisation must consider the wider reputational issues for the Scheme particularly with regard to the risk of fraud. Paperless Direct Debit may not be suitable for some transactions such as high value payments.
Organisations may be subject to annual reviews of their Paperless Direct Debit process and procedures and failure to comply with the Scheme Rules may result in the removal of sponsorship and exclusion from the Direct Debit Scheme.
You will need to consider both the risks and the benefits to decide whether Paperless Direct Debit is suitable for your organisation. The benefits are as follows:
- by offering Paperless Direct Debit sign up at point of sale, you can eliminate much of the paperwork, delay and postage costs associated with setting up Direct Debits
- by applying modulus checking at point of sale (mandatory for Paperless Direct Debit originators) you can ensure that your customer’s bank and building society details are taken more accurately, therefore eliminating later costly administration problems
- you can begin the collections process earlier, as you don’t need to wait for the customer to complete and return the Direct Debit Instruction
- telesales techniques can help increase sales conversions
- by offering customers online sign up, you will be offering an improved quality of service to your customers in line with many large organisations who already offer this service.
How it works
Essentially, Paperless Direct Debit works in much the same way as paper based systems and your customers have exactly the same safeguards as with conventional sign up.
The major difference is that Paperless Direct Debit enables you to sign up customers for Direct Debit collections without the customer having to sign a paper Direct Debit Instruction. If authorisation is made using the Internet these details must be keyed into a screen on your website. You then validate the information and send the Instruction to the paying bank via AUDDIS.
You must then send a confirmation letter to the customer within three working days of their verbal or Internet instruction. Alternatively, this letter incorporating advance notice details must be received by the customer no later than 10 working days prior to their first payment being debited, provided the first collection is made within a month of the Direct Debit being set up.
Starting to use Paperless Direct Debit is easy and can be achieved by completing the following 8 simple steps:
- You must have live AUDDIS status before using the Paperless Direct Debit service and must have completed both an AUDDIS and separate Paperless Direct Debit application form issued by your bank.
- Your bank will require certain criteria to be met for AUDDIS and Paperless Direct Debit. These must be met before an application is signed off for live running e.g. vetting criteria which will include technical, financial checks and the execution of a new indemnity, if the original indemnity was signed prior to 1.1.2004.
- You should ensure that system amendments for AUDDIS incorporate Paperless Direct Debit requirements. Prepare an AUDDIS migration plan if applicable, detailing the various Bacs test requirements.
- Your bank must approve all Paperless Direct Debit material, including scripts, confirmation letters, Internet screens and any other material prior to use. Any subsequent changes to documentation, scripts must be approved by your bank prior to use.
- Prepare staff training and briefings incorporating Paperless Direct Debit. This is essential to avoid wrong messages being given out by staff and to maintain the quality of the Direct Debit Scheme.
- Consider a phased roll out if there are several different applications involved. One type of application per Service User Number is recommended in order to better control and manage Paperless Direct Debit operations.
- Set up the appropriate monitors and apply measures to establish the level of service, for example the number of sign ups, levels of cancellations following confirmation letters, number of unpaids and volumes of queries. This will not only help ensure your service is acceptable but also highlight areas for improvement.
- It is recommended that you have a method of confirming the Paperless Direct Debit sign up such as voice recording. This will assist your operators when dealing with customer queries.