What is a Direct Debit Reference Number?

An efficient national payment system requires each transaction to have a unique identifier or reference number. This ensures it can’t be mixed up with any other payment or cause confusion within the system. 

In reality, every Direct Debit does have a unique reference identification number to support a smooth payment process. In support of this, the average monthly transaction value for Direct Debits in the UK remains stable. In September 2024, the average transaction total amount was £102.17.

The Direct Debit system was introduced in 1964 but became fully operational in 1968. Direct Debit reference numbers were in standard use from the beginning, enabling each transaction to be properly identified during the Direct Debit collection process.  

As Direct Debit usage grows by approximately 2% per year, understanding the Direct Debit system can be valuable for businesses, especially those looking to expand their payment services.

Understanding how Direct Debits work, such as the regulations for Direct Debit collection or the purpose of a Direct Debit reference number, can be useful for businesses implementing a Direct Debit system.

Contents

• What is a Direct Debit reference number?
• Are there issues with Direct Debit reference numbers?
• Problem-free Direct Debit services with Interbacs.

What is a Direct Debit reference number?

A Direct Debit reference number is a unique identifier assigned to a specific Direct Debit transaction. With this number, the customer and all relevant organisations involved in the processing of the Direct Debit transaction can keep track of the payment and attached information. 

Without a Direct Debit reference number, a Direct Debit wouldn’t be able to be processed fully. This could cause issues for both the customer and the collecting organisation, as the payment would remain incomplete.

Available on all Direct Debit statements or related documents, the Direct Debit reference number is also critical if any issue occurs. The customer or collecting agency can’t begin to resolve problems or restrictions on a Direct Debit payment without this identification number. 

Every Direct Debit reference number is completely unique and there shouldn’t be any two Direct Debit transactions taking place using the same number. It’s typically chosen by the organisation collecting the payment and consists of letters and numbers. 

If a business or customer wants to change a Direct Debit collection date or amount, they would need the Direct Debit reference number to initiate the amendment.

How to resolve issues with Direct Debit reference numbers

It’s highly unlikely that there will be any issues with your customers’ Direct Debit numbers. If a small hitch occurs, you can smooth this out in the following ways:

• Miscommunicated numbers

If payment management systems are not fully synchronised and lack visibility, there may be confusion around accurate Direct Debit reference numbers. A common error occurs when a leading zero is dropped during information transfer. Bacs will need the entire number, including a leading zero to process a transaction. 

Ensuring numbers are entered correctly and each Direct Debit has a different, unique reference number will support a reduction in errors. 

• System amendments

When a banking system is updated, reference numbers can become outdated. This can then result in payment failure. It’s important that customer accounts are updated regularly with any changes of information.

For example, if your Bacs reports, such as the ADDACS (Automated Direct Debit and Cancellation Service), tell you a Direct Debit has been cancelled, this must be updated on your system as soon as possible to ensure the next payment will not be taken. 

• Incorrect information 

Direct Debit reference numbers should have accepted characters. This includes alpha, numeric, and special characters such as periods.

Bacs requires each reference number to be between 8 and 18 characters. The collection reference must match the reference attached to the customer account. If there are any discrepancies, the payment can’t be approved for completion. 

Problem-free Direct Debit services with Interbacs

Partnering with an experienced Direct Debit service provider gives you peace of mind and allows you to focus on your core business priorities.

Interbacs offers market-leading Direct Debit solutions. As one of the first Bacs Solution Suppliers in the UK, our customers know that we deliver first-class Direct Debit systems. 

We have a range of products and services that help manage your cash flow, from our Bacs Approved Bureau to our InterPay Bacs payment software. Our Direct Debit solutions make it quick and easy to sign up new customers.

Browse our complete collection of Direct Debit solutions and find the perfect product to better support your business and your customers.