- AUDDIS, direct debit instruction, e-signature, electronic signature, Paperless Direct Debit
- Paperless Direct Debit (PDD)
- 06, APR 2017
Paperless Direct Debit and Electronic signatures
Paperless Direct Debit (PDD)
Many organisations that use Direct Debit as a means of collecting regular payments will have migrated to the Automatic Direct Debit Instruction Service (AUDDIS), which allows Direct Debit Instructions (DDIs) to be sent electronically to Bacs. From there, it’s a sensible step to move to Paperless Direct Debit (PDD)—but what does this involve, and how do electronic signatures fit into the picture?
What is Paperless Direct Debit?
Paperless Direct Debit (PDD) essentially does what it says – it allows organisations setting up Direct Debits with their customers or members to do so without taking a hard copy Direct Debit form from the individual. There are several advantages of PDD over the traditional Direct Debit system under which customers must complete and sign a paper form and return it. Paperless Direct Debit:
– Improves accuracy (no more deciphering difficult handwriting);
allows for a quicker turnaround for organisations (no waiting for Direct Debit Instructions to be posted to the bank—and potentially get lost en route).
– Simplifies the process for customers who do not have to remember to complete a form.
– Offers more convenience for customers who, depending on the form of PDD used, could sign up at any time of the day or night via the internet;
is a more environmentally friendly approach, reducing the amount of paper used by an organisation.
How does PDD fit into the AUDDIS scheme?
AUDDIS was introduced in 1998 as a way of streamlining Direct Debits by allowing organisations to submit Direct Debit Instructions to Bacs electronically. PDD takes this a step further by incorporating paperless sign-up by customers and members, effectively removing paper forms from the whole process.
In order to move to PDD, you must first be using AUDDIS (you can’t submit an electronic sign-up if you post DDIs to the bank!).
Sign-up under PDD
As we’ve already mentioned, PDD means that customers can sign up to pay by Direct Debit without completing a paper form. In practice, this means they can sign up:
– In-person: while a representative of your organisation completes an online form in their presence.
– Over the telephone: by giving the appropriate details to a customer service representative.
– Over the telephone: using the telephone keypad to enter details.
– Online: using a sign-up form on your website.
– Through interactive TV.
– Using an electronic signature.
Your sponsoring bank needs to approve the method or methods of paperless sign-up you wish to use—approval to use one method of paperless sign-up does not mean that you can automatically use other methods. Each paperless method has different rules associated with it and an organisation needs to be aware of these.
It’s important to remember that some customers may not want to use paperless sign-up. The Direct Debit Rules require that in these circumstances you can either choose to allow those customers to sign up using a paper Direct Debit Instruction, or not. If you opt for the latter, any purchase by the customer will need to be paid for by an alternative method.
Electronic signatures and PDD
Electronic signatures have become a means by which documents–primarily contracts-can be signed remotely. Electronic signatures can also be used for Direct Debits, and the Bacs Service User’s Guide and Rules were updated in January to clarify their use. Electronic signatures can be used as an alternative means of paperless sign-up, mainly where it has been identified that more than one person is required to sign the DDI.
Where electronic signatures are to be used, the DDI will be sent electronically to the customer(s) for review, and signature using their approved e-signatures. Once the e-signed documentation has been received by the organisation, it is then processed as any other paperless Direct Debit Instruction and lodged through AUDDIS.
In reality, an electronic signature may not be used frequently as a means of PDD sign up; however, it’s a useful tool to understand and use if the need arises.