A Direct Debit Instruction (DDI), formerly known as a Direct Debit Mandate, is an authorisation that is granted from an individual or business (the payer) to an organisation to collect future payments when they are due. From this point, the payments will be debited from your account and paid to the payee.
Future payments are authorised allowing organisations to collect a variable sum at any time from customers.
Customers are notified of each payment before it is collected, for example via a monthly statement.
All payments are covered by the Direct Debit Guarantee which sets out the protection for both payers and payees in the event that a payment is made in error.
There are a strict set of rules about how the Direct Debit Instruction should be created and presented on paper or on screen.
How do I set up a Direct Debit Instruction (DDI)?
To set up a Direct Debit, a Direct Debit Instruction (DDI) must be completed by the payer. There are two main ways in which this can be done, on paper and in a paperless manner:
- Paper Direct Debit Form: The customer physically fills out a form and this is sent back to the receiving organisation, who then distributes this to the payer’s bank.
- Details provided via telephone: The customer can provide details required for the Direct Debit over the phone to a customer service agent or call centre. The Direct Debit Scheme mandates elements of the script that must be used during such a call.
- Online: Details for the Direct Debit are collected via a bank approved online form. The Form should validate details such as bank account and some form of identity verification at point of entry, helping to reduce potential Bacs submission failures.
Paperless Direct Debit Instructions
There are strict rules for the Direct Debit Scheme that specifies how a Direct Debit Instruction form is laid out and what information is requested. Once a completed form has been received, the organisation must submit the details electronically to their bank. The original has to be stored and archived.
Direct Debit Instruction created on the telephone or online are considered to be paperless and must use a bank approved script or form. The information is also submitted electronically to the bank, informing the payer’s bank of the Direct Debit Instruction. This will allow you to collect payments under this particular mandate in the future. Paperless Instructions need to be stored and archived in the event of a query or claim.
Managing Direct Debit Instructions
Once a Direct Debit Instruction is active, the organisation may continue to collect payments as per the agreed schedule. However, the payer can cancel a Direct Debit at any time by contacting their bank. The organisation can cancel it by submitting a cancellation message to its bank. Bacs will send the organisation a notification message every time there is a change to one of the mandates.