If you are thinking of introducing a new Paperless Direct Debit sign-up method, there are various factors to consider.

What is Paperless Direct Debit Sign-up?

In order to collect money via Direct Debit, an organisation first needs to receive permission from the payer to take money from their account. This permission can be collected either using a paper Direct Debit Instruction (DDI) or using Paperless Direct Debit (PDD) sign-up methods. These include:

Computer Sign-up


The payer completes their details on-screen e.g. via PC, mobile phone or tablet or via an App.

Telephone Sign-up


The payer provides account details and authorisation for Direct Debit collection over the telephone.

Face-to-face sign-up


The payer provides account details and signs-up for Direct Debit collection in person.

Electronic signature

Either with a simple tick-box or using a third party provider such as Adobe or Docusign.

There are other, less commonly used methods. With all of them, the payer is still protected by the Direct Debit Guarantee.

What are the advantages of paperless sign-up methods over a paper DDI?

Paperless Direct Debit sign-up offers a number of benefits vs the paper DDI. It:

  • Eliminates paperwork, associated admin and delays e.g. due to postage,
  • Reduces postage costs,
  • Can allow bank details to be checked in real time, at point of capture, thereby reducing errors. Collecting bank details via the internet, telephone or face-to-face allows the Service User to perform a ‘modulus check’ and an ‘Industry Sorting Code Directory or ISCD check’ during sign-up. This can highlight incorrect details immediately so the payer can be prompted for correct details – preventing subsequent delays.
  • Is a quicker, more immediate sign-up which can help increase sales conversions and ensure that the collections process can begin earlier,
  • Can help present a modern and efficient company image whilst improving the customer experience.

Which Paperless Direct Debit sign-up method is best?

The best sign-up method(s) will depend on many factors. These include the organisation and attitude to risk; industry sector; payer type and profile; transaction value and frequency. When deciding which method(s) to adopt, considerations might include:

  • Cost and time to implement
    Introducing telephone and face-to-face sign-up methods can be quick and inexpensive as they don’t typically require software development. Internet or app sign-up can require development which can be costly and time-consuming and electronic document signature may also add cost if a third-party provider is used, e.g. Adobe or Docusign.
  • Speed of sign-up
    Internet, telephone and face-to-face methods can enable payer sign-up up in one quick interaction, whereas electronic document signature often takes longer to complete.
  • The level of interaction with the payer
    Telephone and face-to-face sign-up, where a representative of the Service User uses a script to collect the information, answer questions and reassure payers, can help to build a more personal customer relationship compared to internet sign-up or electronic document signature.
  • Payer sign-up location
    If sign-ups will take place at an attraction, venue or central event location (e.g. a museum, zoo, shop, club etc) then a face-to-face approach could be successful to encourage payers to join / donate. This is also true for organisations e.g. charities that visit a consumer’s home to take a doorstep sign-up. In contrast, if sign-up will occur by a business at their office location, then electronic document signature might work better.
  • Typical time of sign-up
    For consumers who might prefer to sign-up during the evening or weekend (e.g. at a time convenient to them), internet sign-up might suit their purchasing behaviours.
  • The level of automation 
    Internet sign-up can enable details to be automatically fed into a CRM / database (avoiding re-keying and allowing for bank / address checks in real-time at point of capture).
  • Number of signatories required to authorise the Direct Debit 
    Telephone, internet and face-to-face are suitable if only one signatory is required to authorise a Direct Debit. If two signatories are required, (e.g. for some joint accounts and many corporate business accounts), then electronic document signature could work as an alternative to the paper DDI.
  • Transaction value & audit trail 
    If an organisation (e.g. a charity) wants to collect a small value, then face-to-face or telephone sign-up could offer immediate benefits. If an organisation will be collecting large values, then electronic document signature may be best as it offers a better audit trail. (It is important to remember that it is not always possible to demonstrate that authority was provided via face-to-face and telephone methods. This risk can be mitigated with using paper DDIs or electronic document signature and keeping good archive records).
  • Other documents e.g. contracts to be signed 
    If another document, such as a contract, also requires signing, then electronic document signature works well. It can allow multiple documents to be completed together, (though it does not allow for real-time bank checks unless details are first captured via telephone and the document pre-populated).

These are just some of the considerations. Note: Service Users may choose to outsource some of the sign-up tasks, e.g. to a telephone call centre, but they remain responsible for compliance with the scheme rules.

What needs to be in place before Paperless Direct Debit sign-up is introduced?

An organisation must:

  • be approved by its sponsor BEFORE introducing Paperless Direct Debit sign-up,
  • have each different paperless method approved independently,
  • ensure all documentation e.g. telephone scripts /internet pages etc are approved by the bank (to ensure that the sign-up journey is replicable and scheme compliant),
  • be live on AUDDIS, to enable lodgement of the Direct Debit Instruction electronically, and
  • have appropriate, compliant software in place that can fulfil the scheme requirements (e.g. generate AUDDIS codes and validate references etc).

What are the KYC obligations placed upon the Service User?

With non-AUDDIS Service Users, who post the paper DDI to the payers’ bank, the bank will check the signature on the DDI against the signature on the bank account and take primary responsibility for validation and verification.

Where the Service user transmits the sign-up information electronically via AUDDIS, the bank is unable to perform this check. AUDDIS Service Users are therefore strongly advised to perform validation checks – known as KYC (Know your Customer) checks. With paperless sign-up, it is mandatory that the Service User performs the KYC checks. The organisation must:

  • 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 achieve these checks. Note: Bacs do not endorse any particular approach or third-party provider. They stress “This list should not be read or understood as being, in any way, an endorsement or recommendation by Pay.UK of the suppliers or products named”

Whatever approach the Service User decides to take to meet KYC requirements, it is the sponsoring bank who will approve the methods undertaken. Failure to undertake KYC checks may lead to unauthorised / fraudulent DDIs being set up and increase Direct Debit indemnity claims. Look out  for our next blog for a more detailed overview of KYC checks!

Still Got Questions?

See our related blogs about Direct Debit Instructions, Telephone sign-up and Electronic Document Signature – or contact us with any questions. We are very happy to help!

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