Our A-Z guide is here to help you understand the commonly used Direct Debit terms, phrases and acronyms.

Glossary

ADDACS

The service allowing PSP’s (banks/building societies) to advise a Direct Debit service user, via Bacs, of any amendments to or cancellations of Direct Debit Instructions. The message is sent either electronically or on paper.

ADVANCE NOTICE

The notice period (normally 10 working days plus postal time) given to the payer in respect of the date of debiting and the amount to be debited.

AGENCY BANK / PSP

A type of sponsored institution. An agency bank/PSP participates in clearing and can nominate to sponsor service users, however they must have an agency relationship with a scheme member for purposes such as settlement and have limited liability. Sometimes referred to as an indirect clearer.

ARUDD

The service allowing PSPs (banks/building societies) to return to the Service User any Direct Debit payment instructions they could not apply. The debit is returned to the Service User’s account and Bacs generates a report for the Service User detailing the Direct Debit that is being returned unpaid and the reason for the return.

AUDDIS

The service enabling Direct Debit Instructions to be transferred electronically from Service Users to the paying PSPs (banks/ building societies) via Bacs. Historically all new Direct Debit Instructions were sent to the payer’s PSP (bank) manually and many still are. Instead of sending paper to the individuals PSP (bank) the AUDDIS method allows the organisation to send an electronic file to BACS, saving time and money. A number of organisations have now migrated to AUDDIS or are looking to. Anyone new to collecting by Direct Debit will automatically use this method to lodge their Direct Debit Instructions.

AUDDIS (DDI)

For the purpose of AUDDIS the AUDDIS DDI is either the instruction itself or any subsequent written communication from the customer to the Service User amending the terms of the original AUDDIS DDI.

BACS

Bacs regulates and manages the Direct Debit scheme. Bacs’ objectives are to ensure that a quality service is provided and that rules and regulations are adhered to by both users and PSPs (banks). Bacs’ key responsibilities are to maintain the integrity of the scheme, update the scheme rules and act as an ombudsman/governing body for the service. Bacs is owned and operated by leading retail payments authority Pay.UK.

BACS CYCLE (THIS IS ALSO KNOWN AS ‘PROCESSING CYCLE’)

The Bacs ‘operational’ cycle (minimum 3 English bank working days) comprises:

Day 1 (Input day) - Service User submits data to Bacs as per timetable laid down in the Service User guide Bacstel-IP.

Day 2 (Processing day) - All data accepted is processed through Bacs and passed onto the paying PSPs (banks).

Day 3 (Entry day) - The payer's account is debited and the funds are credited to the Service User’s account.

BACSTEL-IP

A service providing a highly secure access channel into Bacs. It uses internet technologies and public key infrastructure (PKI) security to allow access to Bacs payment services including payment file processing, report accessing etc. Bacstel-IP carries out some online validation of submissions. The term Bacstel comes from when it was a modem based system (Bacs by telephone) and has been updated with IP for Internet Protocol.

BACSTEL-IP SOFTWARE

This is the software that is used to send files to Bacs. As of January 2010 there are 55 different approved versions of Bacstel-IP software from 17 different suppliers.

BULK CHANGE PROCESS

The rules and processes a Service User must follow when applying bulk amendments to Direct Debit Instructions (DDI’s), already held with paying PSPs (banks), in respect of a change of name, legal status, Service User number or Service User reference. The Bulk Change Process is supplementary to The Service User’s Guide and Rules to the Direct Debit Scheme.

BUREAU

An organisation that sends payments to Bacs on behalf of another organisation. See our dedicated Bureau page for more information about our service and the benefits of using a Bureau

BUREAU SERVICE USER NUMBER

A number allocated to a bureau to uniquely identify it to Bacs. A bureau Service User Number starts with a B followed by five digits.

CORE REFERENCE

A minimum of six alpha-numeric upper case characters that is allocated by a Service User to identify a Direct Debit Instruction. The core reference must be quoted in all Direct Debit collections to enable the paying bank to match the collection with the DDI. Use of “DDIC” in the first four characters of the reference must not be used. This is reserved for PSP (bank) use only.

COUNTER CLAIM

A claim raised by the Service User against the paying PSP (bank) following settlement of an indemnity claim which the Service User believes to be unjustified.

DIRECT DEBIT INSTRUCTION (DDI)

Commonly referred to as a “mandate” the correct term is Direct Debit Instruction. Sent by the Service User to the payer’s PSP (bank/building society) as the authority to pay Direct Debits from the payer’s account. These can be sent electronically through Bacs using AUDDIS.

DIRECT DEBIT

The collection of an agreed amount from a PSP (bank/building society) account by a Service User, on request. The amounts and dates may vary from payment to payment. The payment request is sent via Bacs.

DIRECT DEBIT MANAGEMENT

Some existing CRM systems and database packages already help to manage the Direct Debit process, providing the correct transaction codes, dates and logic. There are also a number of specialist packages which can manage all of this and often more.

DIRECT DEBIT GUARANTEE

The Guarantee offered by paying PSPs (banks) to payers in respect of the Direct Debit Scheme specifying the rights and safeguards of payers. See the guarantee in full on our Direct Debit Guarantee page.

DORMANCY PERIOD

The time after which a PSP (bank/building society) will drop details of a DDI from a payer’s account if no collections have been made in that time. The period is normally 13 months and is recorded against a Direct Debit Service User Number (SUN) on the Direct Debit Service Users database.

DUE DATE

The date on which a Direct Debit payment is due to be taken. The payment can actually be taken up to and including 3 working days after the due date.

FACILITIES MANAGEMENT

In the context of the Direct Debit scheme, a Service User or bureau that takes responsibility for the collection or administration of Direct Debits on behalf of another institution/company that may not be a Service User in its own right.

INDEMNITY CLAIM

A claim made by the paying PSP (bank) in respect of an incorrect Direct Debit being applied to an account.

INDIRECT CLEARER

An institution which:

(a) provides Bacs payments services to third parties under the sponsorship of a member and

(b) has entered into a sponsorship arrangement with that member referred to in (a) above.

INDUSTRY SORTING CODE DIRECTORY (ISCD)

A directory that combines a number of key databases. It contains information about all PSPs (banks/building societies) connected to any of the UK clearing systems; Bacs, CHAPS and Cheque and Credit Clearing. The directory contains a record for each PSP (bank/building society) branch and other financial institutions involved in the UK payment systems. It includes the sorting code, branch details and details of the bank that settles transactions for the branch in each of the clearings.

INTER BANK TRANSFER OF DIRECT DEBITS AND STANDING ORDERS (TODDASO)

A service to assist customers when moving their bank/building society accounts by electronically transferring Direct Debit and Standing Order information between banks/building societies.

KYC (KNOW YOUR CUSTOMER)

The Paperless and to some extent the AUDDIS rules require you to check the identity of anyone that you are looking to collect from. This can be carried out manually or via specialist on line tools. Get in contact with us and we can point you in the right direction.

LODGE/LODGEMENT

The process of the paying PSP (bank) accepting the DDI.

MANDATE

This term was previously used by Bacs and has now been replaced by Direct Debit Instruction.

MIGRATION (AUDDIS)

The process by which a Service User transfers non-AUDDIS DDIs to the automated AUDDIS system.

MODULUS CHECK

An arithmetic process to determine if there is a valid link between a sorting code and an account number range, i.e. whether a particular account number could exist at a specified sorting code.

MODULUS CHECKING SOFTWARE (BANK ACCOUNT CHECKING SOFTWARE)

You may wish to make sure that the bank details that you are collecting are likely to be correct. You may even have to in order to comply with the Direct Debit rules (Mandatory for Paperless and Highly recommended for AUDDIS). Modulus checking applies an algorithm to the sort code and account number and can reduce errors in data dramatically. Our Bank Validation software can support you with this.

ORIGINATOR

A Service User who originates payment instructions, whose bank/building society account details make up the originating account information in a payment instruction, and who is responsible for those payment instructions. An originator can be either a direct or an indirect submitter.

ORIGINATOR’S IDENTIFICATION NUMBER (OIN)

A unique six-digit number allocated to each Service User who is authorised to use the Direct Debit Scheme. For Direct Debit Scheme Service Users, this number is the same as the Service User Number.

PDD (PAPERLESS DIRECT DEBIT)
Paperless Direct Debit and is an alternative method of sign up to the paper instruction. This enables the organisation to set up a Direct Debit for their customer without paper and allows it to happen over the phone or through the internet for example. For more information see our Paperless Direct Debit page.

PAYER

The person that, by authorising a Direct Debit Instruction, allows a service user to collect Direct Debits from their account.

PAYER’S BRANCH

The paying PSP (bank) branch holding the payer‘s account to be debited.

PAYING BANK

The PSP (bank/building society) at which a Direct Debit Instruction is lodged for a payer and that raises messages to advise of amendments or cancellations in relation to the Direct Debit Instruction.

PAYMENT DATE

The date on which a Direct Debit payment is made. This can be done up to or including three working days after the due date.

PROCESSING CYCLE

The minimum time taken for a payment instruction to be submitted to Bacs for processing and the time it reaches the destination account. The processing cycle has four stages: arrival, input, processing and entry. See also three-day cycle.

REFERENCE

The reference allocated by the Service Users to each individual DDI and Direct Debit (See ‘Core Reference’).

RE-PRESENTATION

A Direct Debit, that was returned to the Service User as unpaid, being resubmitted for collection.

RE-TRY SYSTEM

When a PSP (bank) attempts to process a Direct Debit and finds that there are insufficient funds in an account, they will re-try to process the DD later the same day before failing it. This could allow deposits to arrive in the account during the course of the day to cover the outgoing payment and will hopefully reduce unpaid item fees and improve consumers banking experiences.

SERVICE USER

A company, group of companies, charity etc. that is sponsored to use one or more Bacs service. A Service User may also be referred to as a payee. (See also Originator).

SUN (SERVICE USER NUMBER)

The Service User Number is the 6 digit number given to any company that is collecting via the Direct Debit scheme. It is a unique identifying code used by Bacs.

SPONSOR

Any financial institution that can authorise Service Users to use Bacs. Also referred to as sponsoring bank.

STANDING ORDER

A credit payment instruction as detailed in the Standing Order mandate.

TRANSACTION CODE

A two-character code used in each payment instruction, specifying the type of payment instruction (e.g. debit, credit, DDI).

UNPAID DIRECT DEBIT

A Direct Debit that is returned to the Service User as the funds could not be collected from the destination account, e.g. insufficient funds, or no DDI set up on the account. See also automated return of unpaid Direct Debits.

WORKING DAYS

For the purposes of the Scheme, working days is defined as English bank working days excluding Saturdays, Sundays and Bank Holidays.