Paperless Direct Debits (PDD)

The Benefits of Paperless Direct Debit

The paperless route was introduced in 1998 to increase the speed of the signup process. There are a number of possible approaches with paperless signup and each offer different advantages:


  1. Telephone

    The payer provides their authority over the phone by giving account details verbally to the Service User representative. If any account details are incorrect they can be checked and verified by the Service User representative with the payer on the phone. By doing this at the point of sign up, the Service User representative can negate the need for further correspondence or failed set up. In addition, the immediate customer support offered by the Service User representative in this way, is already strengthening the relationship.

  2. Internet

    The payer provides his/her authority by completing an on-screen Direct Debit Instruction (DDI) which is sent to the Service User over the internet. This offers the advantage that payers can sign up at any time of the day or night, which depending on the business and payer demographics, can be advantageous, i.e. students and shift workers will often sign up to services in the evening whilst others, i.e. retired payers may prefer to sign up during the day. A checking system can also be built in to the screens to ensure that the payer is unable to progress if details are entered incorrectly

  3. Face to face

    The payer must be offered a paper DDI to sign however, if the customer is willing, a Service User representative can enter the details straight into a computer without signing a paper copy. This offers the benefits that the DDI can be set up far quicker than if a paper DDI has to be forwarded and received and the details then entered into the system. It also allows for immediate checks of the accuracy of information provided, as well as ensuring that the paper DDI is not taken away to be completed ‘at some point in the future’ by the customer, (a time where possible customers are often lost due to failure to complete the form).

  4. Telephone key pad / interactive tv

    A less common approach, but ones which as above, can be used to ensure that immediate checks are conducted on the data and that customers sign up there and then rather than going away and possibly being lost to follow up.


Additional Features

In addition to the advantages mentioned above, Paperless Direct Debit offers:


  1. Quicker turnaround time

    No waiting for a postal DDI. This means the Service User can collect monies faster and provide the payer with prompt access to goods/services

  2. Reduced paperwork and postage costs

    Reduces paperwork, postage costs and it’s environmentally friendly

  3. Better service

    You can gain business and competitive advantage as customers like internet / telephone options.

  4. Improved accuracy

    Fewer keying errors or poor handwriting to decipher – bank details checked in real time.

  5. Additional revenue

    Get more people signed up = additional revenue


Paperless Direct Debit addresses some of the issues caused by paper sign-up:


  1. Poor handwriting on paper DDI’s

    Often detail can be keyed into a system incorrectly due to poor handwriting or missing information on a paper DDI.  With a system where details are keyed directly into an interface and validated at point of entry/sale, this issue is negated.

  2. Moving customers away from other payment types

    Sending out a paper DDI to move existing customers away from Standing Orders or other payment approaches, provides an opportunity for the customer to ‘opt-out’ of the service.  By gaining authorisation during customer contact, i..e with a Service User representative on the phone or face to face, the fears / concerns of the customer can be addressed and overcome which is more likely to result in a successful outcome.


Paperless Direct Debit Signup – Issues to Consider

In order to operate a paperless signup system a Service User MUST:


  1. Obtain approval

    Obtain approval from their sponsoring bank to run a paperless system.  It will not be suitable for all organisations

  2. Have live AUDDIS status

    Have live AUDDIS status (as authority has to be transmitted electronically)

  3. Only use their AUDDIS SUN’s for paperless DD applications

    Only use their AUDDIS SUN’s for paperless DD applications. The Service User should not submit a paper DDI under an AUDDIS SUN

  4. Obtain approval

    Obtain approval of all documentation from the sponsoring bank before collecting DD instructions, particularly: The script used for telesales staff, face to face, telephone keypad and internet screens, DD confirmation letter, Advance Notice and DDI


A paperless approach does introduce additional liability / risk and therefore does require additional processes to be in place. It is therefore not suitable for all products or sectors.  Service Users should be aware of the additional risks:


  1. Verify the customer details

    It is the Service Users responsibility to verify the customer details. There are a number of ways that this can be done, including existing customer records, electoral roll details etc.

  2. Validate the payers bank details

    It is the Service Users responsibility to validate the payers bank details, i.e. by conducting ‘modulus checking’.

  3. Counter claim

    Service Users cannot counter claim following receipt of an indemnity claim because ‘payer disputes have given authority’.

  4. Confirm

    Service Users must issue a ‘Confirmation’ that the direct debit set-up.

Paperless Direct Debit Process

Paperless Direct Debit enables Service Users to capture payers’ bank details over the telephone, on-line or any other means approved by your sponsor bank. Paperless Direct Debit is used alongside the traditional paper based signup.

The Paperless Direct Debit process is:


  1. Access

    The bank details are entered online and passed into the Direct Debit Management Software (Label – e.g. Finance Application, CRM Software) or taken directly by phone and entered,as into the suggested platforms

  2. Data entry

    Bank details must be entered directly into the back office system holding the payer bank details (i.e. once at the ‘point of sale only’)

  3. Validation

    Bank account validation must be done at the time of entry.

  4. Confirmation

    Confirmation of the Direct Debit set-up is given to the payer (by letter or electronically), advising of the new Direct Debit set-up.  This can also be combined with ‘advance notice’

  5. Advance notice

    Else, separately, advance notice is sent to the payer, advising of the collection schedule

  6. Lodged

    The Paperless Direct Debit Instruction is lodged at the payer’s bank using AUDDIS


Due to the additional liability and risk associated with it, Paperless Direct Debit isn’t appropriate for all types of business and client bases. Paperless Direct Debit cannot be used if;

  • Two signatures are required to authorise payment from an account
  • A paper Direct Debit Instruction is requested by the payer
  • Any Paperless Direct Debit Script question is not answered satisfactorily

The Paperless Direct Debt process will require you to make changes to your procedures and systems. Your Paperless Direct Debit processes must be compliant with the Scheme rules and signed off by your sponsor bank.

Paperless Direct Debit Script

All Paperless Direct Debit users must follow a prescribed process when signing up payers without the use of a paper Direct Debit Instruction. This process is known as a Paperless Direct Debit script. All Paperless Direct Debit scripts must be Scheme compliant and signed off by your sponsor bank before use.

Key steps of all Paperless Direct Debit scripts are;

  1. Identification of the payer

  2. Capture and validation of account details

  3. Confirmation of payments and service user’s name

  4. Option to hear / read the Direct Debit Guarantee

On-line (internet) sign-up Paperless Direct Debit scripts also requires;

  1. SSL Server Security must be present and be a minimum of 128bit

  2. A printable Direct Debit Instruction

  3. Customer service telephone number, postal and email address

  4. Online advice of the advance notice

  5. Advice of the bank statement narrative used for collections

Account Validation

Account validation improves the quality of data input by Service Users, so that only valid bank details are stored for subsequent lodgement. Account validation incorporates:


  1. Industry Sort Code Directory (ISCD)

    Lists all UK Sort Codes and along with allowed transactions

  2. Modulus checking

    Tables to validate many sort code and account number combinations

  3. Debiting and Crediting banks and Building Societies

    Rules applied to non-standard account numbers for Bacs processing


The first two, or even all three, aspects of account validation are already used in your Bacstel-IP submission processes, but will also be required at point of data entry when interacting with the payer via a Paperless Direct Debit signup process. Account validation data is available directly from Bacs or from Bacstel-IP software providers

Payer Verification

Payer verification is required to minimise risks of customers using other peoples’ bank details. The verification method used is decided by your sponsoring bank, based on an assessment of risk associated to your business sector.

To verify payers, service users can utilise: historical data for existing customers, and a selection of external data for new customers. Bacs have issued a recognised list of methods to verify a payers identity, available from your sponsor bank. The list includes verification methods using external data sources, for example: credit reference agencies, post code / address data, and electoral roll data. The method used is decided, agreed and signed off by your sponsor bank appropriate to the level of risk associated to the fraudulent set-up of DDI’s. Certain business sectors will require more comprehensive payer Verification methods than others

Confirmation of Direct Debit Set-up

Following a Paperless Direct Debit sign-up, Service Users must send a confirmation letter or combined confirmation and advance notice letter to the payer. The confirmation letter confirms the bank details that will be debited, the Service User details and the Direct Debit Guarantee.

The confirmation letter must include: account holder name, sort code and account number, Direct Debit Instruction reference, Service User Number (and name) and Direct Debit Guarantee

The confirmation letter must be addressed to the payer, i.e. bank account holder, who may not necessarily be the customer. Confirmation letters must be sent within 3 working days of sign-up, or no later than 10 working days prior to the first collection dates as long as this is within 1 month of the signup, if incorporated with the advance notice letter. The confirmation letter may be issued electronically as long as it is formatted in the same way as a paper copy of the confirmation letter would be.

Paperless Direct Debit Implementation

Paperless Direct Debit (PDD) is a service that must be applied for by the Service User.  It can be applied for and implemented at the same time as AUDDIS. Approval must be obtained from the sponsor bank for: telephone script / internet screens, account validation implemented at ‘point of sale’, confirmation (or combined) letter and DDI’s and Guarantee. The sponsor bank determine the method of customer verification.

All Paperless Direct Debit Service Users must have at least 2 of their staff complete Bacs’ e-learning PDD on-line training programme. Your processes may be subject to periodical reviews by your sponsor bank.

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