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Paperless Direct Debit verification checks

Direct Debits make paying bills, subscription services, energy bills, and housing costs easy. They also reduce the amount of stress a customer experiences when dealing with their finances. Paperless Direct Debits are among the most common forms of payment in the UK today, but certain verification checks have to be done in order to proceed with a Direct Debit agreement. Continue reading for our helpful guide on paperless Direct Debit verification.

What is paperless Direct Debit?

Paperless Direct Debit allows companies to sign up customers for Direct Debit collections in a faster and simpler sign-up process. Customers are able to sign up for paperless Direct Debit agreements over the phone, the internet, using a telephone keypad, face-to-face, and even via an interactive television screen.

Paperless Direct Debits not only save time, but they greatly reduce administrative tasks and costs for companies. It’s also a convenient way for a customer to sign up for a Direct Debit, as it reduces the amount of paperwork they would normally have to deal with, and reduces the possibility of delays.

What steps are involved in paperless Direct Debit verification?

To meet paperless Direct Debit verification requirements, companies must do their due diligence to ensure that customers or companies they’re dealing with are who they say they are.

They must have solutions in place that meet all of the below steps:

  • The business must carry out a modulus check of the customer’s bank account data at the point of sale.
  • They must prove that the customers are who they say they are.
  • The company must prove that the customer lives at the address they stated.
  • They also must prove that the bank account details given by the customer are correct. This means ensuring that the bank account name is linked to the sort code and account number provided by the customer.
  • A change of bank details

Once all of these verification checks have been completed, and the company is happy that the customer is who they claim to be, then the direct debit can be approved and completed.

Failure to do proper direct debit verification can result in fraud. If the customer isn’t who they say they are, they could have gained the direct debit by ill means and potentially used somebody else’s account information, or a completely false bank account. This will result in lack of payment for the services and can obviously be a huge problem for businesses. It also reduces the possibility of making mistakes by keying data incorrectly. Verifying the users’ identity properly makes it highly unlikely that service users would take funds from the wrong bank account.

In terms of a customer changing their bank details after the Direct Debit has been set up, the company must also perform the same verification checks. Failure to verify these details may result in an increased risk of fraud and, as a consequence, indemnity claims being received and the scheme being brought into disrepute.

Potential risks of paperless Direct Debit

Prior to going ahead with Direct Debit verification checks, companies must be aware of the risk involved in offering this service to customers.

  • It’s the organisation’s responsibility to verify the customer and their details. There are software packages available to help, like Interbacs’ Direct Debit Management Systems.
  • Organisations must be aware of the impact it may have on their business if customers prefer a different payment method in future.
  • Paperless Direct Debit transactions may not be suitable for high value payments, and could open the door to fraud.

Advantages of paperless Direct Debits

Despite the few risks associated with Direct Debit transactions, there are a multitude of advantages and positives that paperless Direct Debits give a company and their customers. They are:

  • Speed and reduced administration
  • Popularity
  • Storage
  • Cost-effective
  • Additional revenue
  • Environmentally friendly

Speed and reduced administration

With paperless Direct Debits, customers can immediately access their services and the company can start to take payments straight away.

Also, allowing customers to sign up instantly means a lot less administration. The company now doesn't need to transfer data from paper into an electronic database, freeing up valuable work time.


Customers much prefer to use paperless Direct Debits because of how convenient it is for them. Signing up for a new smartphone contract in-store with a paperless Direct Debit means they can walk out of the store with the phone and use it instantly.


The lack of physical paperwork involved with a paperless Direct Debit frees up storage. Businesses just need an online database and a login.


Since paperless Direct Debits are fully electronic, printing and postage costs are avoided. So they’re a lower cost to set up.

Additional revenue

Because paperless Direct Debits are so quick and easy to sign up to, businesses are likely to get more customers signing up. This naturally leads to increased revenue and a larger profit.

Environmentally friendly

The lack of paper means paperless Direct Debits are much more environmentally friendly than the alternative.

Paperless Direct Debit management at Interbacs

Interbacs was established by Bacs software developing experts with more than 30 years of experience in Bacs payment services software. Over the years, we have developed a well-rounded team of developers, project managers and banking experts to provide the ultimate support for all your Bacs payments processing needs.

We concentrate on delivering the highest quality payment and collection solutions, including Direct Debit solutions, with exceptional management facilities. Using our paperless database, you can be confident in your Direct Debits being managed efficiently. The friendly, professional and efficient processing team at Interbacs is always on hand to answer your phone calls with a smile and a listening ear.

If you require any assistance in regards to your Direct Debit solutions, don’t hesitate to contact us on 08444 127 180, or email us at For more information on the requirements for paperless Direct Debits, read our blog on what all paperless Direct Debit service users must have.