IE has recently been asked by a charitable client – CfaN – to integrate a Paperless Direct Debit system into their website. We thought that the findings of our research exercise might be useful to other charities, colleges and commercial organisations…
Until recently all Direct Debit applications were paper-based. Even where Direct Debit options were available on a website a user normally had to print off a form, sign it and then post it back to the supplier. That all changed in 2008 when Paperless Direct Debit was approved. Now Direct Debit instructions can be taken over the telephone, Internet, interactive TV and other systems.
At the heart of Paperless Direct Debit is the AUDDIS system (automated direct debit instructions service) which automates the Bacs transfer of funds between a customer’s bank and the collecting organisation. Any business that wants to offer Paperless Direct Debit must be AUDDIS compliant, a process that is managed by their bank.
Since Direct Debit involves funds being taken from one account (“the payer”) and transferred to another account (“the payee”) some kind of authorisation has to take place. In the past this was through a signed Direct Debit instruction which let a customer’s bank know that a business or organisation was approved to take payment from their account. Paperless Direct Debit works in a similar way but customers will enter their details on, say, a web form. By clicking the submit button the customer authorises the Direct Debit instruction.
As with any other financial system Paperless Direct Debit has a set of stringent rules associated with it and customers have the same rights and safeguards as with traditional Direct Debit, including an immediate refund if a transaction is made in error. Where it differs is that security checks will happen in real-time rather than waiting for a paper form to be processed.
It is also the responsibility of the payee’s bank to approve the web pages that customers visit to set up a Paperless Direct Debit instruction. And any future changes to the page must be subsequently approved. This may lead to situations where a business, their website supplier and their bank are working together on the design of online forms.
Benefits for the Payee
Charities, colleges or other commercial organisations can benefit form paperless DD in a number of ways:
• They save money on paperwork and postage
• Bank details are validated automatically at the point of entry
• They can begin collecting payments much earlier and don’t have to wait until a paper form is processed.
Benefits for the Payer
Customers will benefit from:
• A seamless, unbroken transaction experience that can be carried out online
• Data validation which prevents delays caused by errors in posted forms
• Instant payment for goods or services.
So how will Paperless Direct Debit develop? We think it’s safe to say that as more devices and technologies become commonplace the scope of Paperless Direct Debit will develop. Mobile, where a user’s demand is based on immediate need, is an obvious candidate. Imagine setting up a Direct Debit payment by simply scanning a QR code or even through swiping your mobile phone.
In fact any device that enables connection to the Internet could be used to set up a Paperless Direct Direct instruction. Organisations will be able reach potential donors / customers based on their activity at that particular time. A gamer, for example, could create a monthly payment for games directly from his console; a tablet user could subscribe to an online magazine whilst travelling by train.
One thing is for sure, with over 10% of identity fraud being direct debit payment fraud banks will need to keep on top of their security systems if they want to maintain customer trust in paperless direct debit.
So if you want to expand the options your customers have to buy or donate directly on your website why not implement Paperless Direct debit.