Are your customers able to sign-up online to pay you by Direct Debit? Would you like to introduce online Direct Debit payment options? Let’s review what’s involved with online Direct Debit sign-up.
What is an online Direct Debit sign-up?
Online sign-up occurs when the payer provides their authority for Bacs Direct Debit collections by completing their details via the internet. The payer could provide these details in different ways, e.g. via a computer at home, via an app they have downloaded or onsite at a physical venue where they might enter details into a hand held device / tablet. Once they enter their details, the information is sent to the service user or its agent over the internet.
What the benefits of online Direct Debit sign-up?
There are lots of benefits with online sign-up. These include:
- Convenience. Payers can sign-up at a time that suits them, e.g. outside of office hours, in the evening or weekend etc.
- Paper-free – no forms to print and sign.
- Less admin. Data can be passed automatically into the CRM / database without re-keying, thereby reducing errors arising from manual updates.
- Accuracy. Collecting bank details via the internet allows the Service User to perform a ‘modulus check’ and an ‘Industry Sorting Code Directory check’ during sign-up. This can highlight incorrect details immediately so the payer can be prompted for correct details – preventing subsequent delays.
- Data can be passed automatically into the database without re-keying, thereby reducing errors arising from manual updates .
- Quicker, more immediate sign-up. It removes delays e.g. due to postage time – which can help increase sales conversions and ensure that the collections process can begin earlier.
- Familiar and modern approach. This can positively impact on the customer experience and company image.
How can online sign-up be introduced?
When organisations collect Direct Debits under their own Service User Number and wish to use online sign-up, they must first:
- be approved by the bank for on-line sign-up,
- develop internet screens or purchase an ‘out-of-the box’ offering which is then tailored to include the organisations details,
- ensure that the internet screens are reviewed and approved by the bank (e.g. by taking screenshots and submitting these to the bank),
- be live on AUDDIS so the Direct Debit Instructions can be lodged with the banks electronically,
- have appropriate, compliant software in place to manage Direct Debit data.
What are the Service Users responsibilities?
It is the Service Users responsibility to perform validation checks – known as KYC (Know your Customer) checks. These are strongly recommended if a Service User uses AUDDIS but mandatory if using online sign-up. The organisation must take steps to:
- identify the customer/payer and ensure they are who they say they are,
- ensure that the address provided is that of the customer/payer,
- ensure the account number and sort code relate to the payer, and,
- ensure the person is authorised to sign on the bank account.
Bacs produce a list of “Verification Measures” to help Service Users decide how to undertake these checks. The approach must then be approved by the sponsoring bank. Bacs highlight that failure to undertake KYC checks may lead to unauthorised / fraudulent DDIs being set up and increase Direct Debit indemnity claims. When the bank approve the sign-up screens they will check for inclusion of steps to address KYC requirements.
In addition, Service Users must ensure a good audit trail e.g. so they can demonstrate they have obtained authority from the payer.
What should be included in an online Direct Debit sign-up journey?
When the bank review sign-up screens to approve them prior to use, they will check that the mandatory requirements are included. These are:
- Verification that the customer is the account holder and therefore the payer.
- Collection of the payer’s account number, sort code and account name.
- Confirmation that the payer is the only person required to authorise debits from the account.
- Advice of the advance notice period (separately or included within the Guarantee).
- Confirmation of the bank details back to the payer.
- The Direct Debit Guarantee or explanation of it.
- Advice of the company name that will appear on the bank statement (separately or included within the Guarantee).
- For service user’s who are unable to lodge the DDI within 10 working days advise that the Direct Debit will not be lodged until a future date.
- Advice that confirmation of the set up will be sent – with details of when and by what method.
- A general enquiries/customer service contact telephone number.
- A postal and / or email address.
It is recommended that the online sign-up also includes modulus checking and address lookup / verification to help reduce errors.
Still got questions?
There is more information about this and other Paperless Direct Debit options on our website. If you are interested to learn more then contact us, we are happy to help with advice and guidance.