paperless direct debit - the preferred membership payment option

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Paperless Direct DebitThe preferred membership payment option

What’s covered….

• Who are Bacs?• Direct Debit – how it works (Standard / AUDDIS / Paperless)• Direct or indirect access – a model for all organisations• Consumer perceptions of Direct Debit• The benefits for organisations and consumers• One charity’s experience• Marketing support from Bacs

Who are Bacs?

• A not for profit, membership based industry body owned by 16 of the leading banks and building societies in the UK, Europe and US

• Responsible for the day to day running and integrity of the Direct Debit and Bacs Direct Credit schemes in the UK

• Identify and support opportunities that generate additional Direct Debit and Bacs Direct Credit volume

45 years at the heart of the payments industry

• 5.7 billion payments• £4.3 trillion value• 3.3 billion Direct Debit payments• 75 % GB adults• 90% GB workforce• 5 million weekly wages• 92.9 million daily transactions

How does it work?

Day 1 - Input day• Input day is the latest day a business user/bureau may submit a payment

file to Bacs for a processing cycle. Payment files must be transmitted to Bacs between 07.00 and 22.30

Day 2 - Processing day • Files are delivered to the recipient banks which then process each payment

Day 3 - Entry day • Payments are simultaneously credited to the recipients’ accounts and

debited from your account.

Get going with Direct Debit

• Contact your bank - provided you meet the required criteria, which involve checks for integrity, financial standing and administrative capability, you will be accepted onto the Scheme

• Choose an access method – direct or indirect (via a bureau)• Paper, AUDDIS or paperless DD?

Direct or indirect access?

Direct• Bacstel-iP• Bacs solution supplier software• Payment Services website

Indirect• Bacs approved bureau• Payment Services website

Facilities management• No sponsorship required• FM co collects in their name, re you• Collect funds into a ‘client account’• Manages reports and exceptions

Direct Debit – why?

• It's cheaper than cheque and safer than cash

• You control the date of receipt into your account

• You get cleared funds in your account on a known date

• You can collect variable amounts on regular or irregular dates

• It can eliminate time consuming reconciliation. Only errors and non-payments will be notified to you, so you can carry out reconciliation by exception

• Customers like them

Paper, AUDDIS or paperless?

• Paper based – Customer completes a paper Direct Debit instruction and returns it to the biller– Biller logs details and posts it to the customer’s bank– Biller can claim on the DDI after 10 working days

• AUDDIS– Customer completes a paper Direct Debit instruction and returns it to the biller– Biller lodges the DDI with customer’s bank electronically via Bacs, keeping the paper DDI

(or not)– Biller can claim on the DDI after 2 working days

• Paperless– Customer signs up over the phone, internet or face to face – no paper instruction– Biller lodges the DDI with customer’s bank electronically via Bacs– Biller can claim on the DDI after 2 working days

Paperless DD – why?

• Eliminates much of the paperwork, delay and postage costs associated with setting up Direct Debits

• Increased simplicity and convenience for the payer, with no forms and no delays

• Modulus checking at ‘point of sale’ ensures accuracy of account details, eliminating later costly admin problems

• You can begin the collections process earlier, as you don’t need to wait for the payer to complete and return the Direct Debit Instruction

• Phone and web can help increase sales conversions

Consumers like Direct Debits

8% will not and 2% cannot pay by

Direct Debit

CANNOT / WILL NOT

79% of the GB adult population have a positive attitude to Direct Debit

7% are reluctant to pay by Direct Debit

RELUCTANTS

16% are selective but positive

about paying by Direct Debit

SELECTIVES

63% actively prefer to pay by

Direct Debit (37% advocate)

PREFERRERS

Saturated or still an opportunity?

ELECTRICITY BILLS

GAS BILLS

TELEPHONE BILL

WATER BILLS

SUBSCRIPTION TO DIGITAL/CABLE OR SATELLITE TV

INTERNET

SEPERATE CABLE PHONE BILL

COUNCIL TAX

MORTGAGE

LIFE OR ENDOWMENT ASSURANCE

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

11%

11%

6%

6%

4%

3%

19%

8%

1%

0%

3%

3%

1%

7%

1%

1%

9%

4%

0%

1%

3%

4%

2%

4%

3%

4%

4%

3%

0%

0%

53%

50%

67%

59%

70%

71%

49%

69%

85%

75%

CashChequeDebit CardDirect Debit

Saturated or still an opportunity?

MEMBERSHIP OF MOTORING ORGANSIATION

SUBSCRIPTION FOR MOBILE PHONE

TRADE UNION SUBSCRIPTION

REGULAR PAYMENTS TO CHARITY

CLUB/SOCIETY SUBSCRIPTION

MAGAZINE SUBSCRIPTION

HEALTH CLUB GYM MEMBERSHIP

OPTICIANS

OTHER INDIVIDUAL COMMITMENTS

PAYMENTS FOR CATALOGUE/MAIL ORDER





0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

17%

4%

2%

6%

0%

0%

0%

2%

11%

9%

25%

18%

20%

4%

3%

1%

2%

0%

3%

5%

15%

7%

5%

2%

1%

2%

3%

0%

2%

2%

17%

43%

47%

78%

51%

75%

36%

49%

58%

55%

CashDebit CardInternet BankingDirect Debit

Benefits to customers

• Paper, AUDDIS or paperless – all have the same core benefits to consumers

– Convenience– Budgeting– Not forgetting bills– Control – Protection of the Direct Debit guarantee

• PDD offers the added benefits of increased simplicity and convenience for the payer, with no forms and no delays.

• Immediate cover / membership without initial instalment on a credit or debit card

Don’t just take my word for it

• The leading national charity for spinal cord injured people

• User led organisation – people with spinal cord injuries supporting others in the same situation

• 5 years a Direct Debit service user, only 1% of income from only 100 regular donors

• Decided to move to paperless DD in 2012 – a 6-8 month project

Spinal Injuries Association

• Business drivers – cost reduction and lowering DD rejections• Main issue was the updates required to their database• Cost quoted at ‘around £5,000 all in’• Benefits accrued

– Immediate set up – no waiting for paper flows– Reduced staff time on modulus checking – automated now– Reduced number of rejected lodgements– Faster reporting– Set up to grow regular donors in the future

Bacs marketing support - bacs.co.uk/marketingdirectdebit

• Local authority sector – 4th year in London – 1m new transactions up to 2012, up to 9.5% response rates, plus developing interest for other regional campaigns and member banks

• Housing rent sector – to support social landlords deal with the roll out of Universal Credit

• Water sector – 2nd year in 2013 – 2012 generated almost 500,000 new transactions from three participants, up to 4.3% response rate and uplift in response rates from 24% - 400%. Five participants to date for 2013

• Magazine subscriptions campaign – launches Oct 2013 – 5 publishers, 74 titles promoting Direct Debit until March 2014

• Individual biller support on case by case basis

• Big Break 2012– 29 billers mailed 4.2m consumers– 2.06m new transactions pa– £135,000 for 15 charities– 160m campaign reach– Up to 28% campaign response– A major utility – 20% uplift in

response Q2 v Q1

• Big Break 2013– 91 billers contacted 9.2m customers– 3.23m new transactions pa– £140,000 raised for 120+ charities– 95m campaign reach– Water company – 19% response– Major utility – 2.1% response from

4m customers

Our Big Break campaign credentials

Big Break 2014

• £12,000 cash prize - this represents a year’s worth of household bills – plus £2,000 for business to business

• Participating billers’ new / existing Direct Debit payers are put into the prize draw

• Single campaign across the UK and Northern Ireland

• Overarching CSR umbrella – looking to raise money for 100 good causes as part of the campaign – target to raise £150,000 in total

• Campaign to run from 1 February 2014 to 30 June 2014

Graham Callaghan

[email protected]

07825 543777

Dawneth Perry

[email protected]

07980 797356

w: www.bacs.co.uk