In payment processing, compliance isn't just a box to tick – it's a critical safeguard for your business's reputation, finances, and operations.
Recently, Pay.UK issued a timely reminder to Direct Debit service users about their Know Your Customer (KYC) obligations, emphasising the need to verify a payer's authority before lodging a Direct Debit Instruction (DDI). This isn't optional; it's a requirement outlined in Sections 3A.2 and 3B.1 of the Service User’s Guide and Rules to the Direct Debit Scheme.
Why this matters...
Failing to meet KYC standards can lead to unauthorised DDIs, potential fraudulent collections, increased indemnity claims, financial losses, reputational damage, and even the loss of your ability to collect Direct Debits if your sponsoring Payment Service Provider (PSP) withdraws their support to your business.
Additionally, businesses must inform their PSP of verification measures and obtain approvals, especially for Paperless Direct Debit operations.
Key takeaways from Pay.UK include:
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Modulus checking alone isn't enough – it only confirms that an account could exist, not that it actually does or belongs to the payer.
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For users of the Automated Direct Debit Instruction Service (AUDDIS) outside of paperless channels, robust payer account verification is strongly recommended to minimise risks from errors or fraud.
As businesses scale, manual KYC processes become inefficient and error-prone, heightening these risks. This is where automated solutions shine.
Our InterPass software is designed specifically for identity verification in Direct Debit setups, automating KYC checks to ensure compliance while streamlining operations. With features like API integration for seamless embedding into your systems, support for various identity documents via advanced tech for high accuracy and a user-friendly interface, InterPass reduces human error and accelerates verification. It also prioritises security with advanced encryption and secure data storage, helping prevent identity theft and fraud in payment collections.
By adopting InterPass, businesses can not only meet Pay.UK's KYC mandates but exceed them – improving user experiences, boosting efficiency, and protecting against the pitfalls of non-compliance.
Whether you're an SME or an enterprise, staying ahead of regulatory reminders like this one is key to sustainable growth.
Ready to enhance your Direct Debit KYC Compliance?
Learn more about InterPass or request a software demo.
Considering switching your Bacs Direct Debit provider?
If you are considering switching your Direct Debit processing provider; give us a call on 0161 667 0758 or email sales@interbacs.com.
We also have some helpful guides on switching:
