BECS Direct Debit Authorisation codes

Another important element of using the Direct Debit scheme is knowing what authorisation codes are and what they’re used for. In this section we’ll explain all the details.

What is an authorisation code?

For starters, what is an authorisation code? It acts as a unique identifier for organisations using Direct Debit. The sponsoring bank will first allocate an authorisation code to the organisation (the initiator/your business) wishing to take payments via Direct Debit. The bank then submits this authorisation code to the BECS Central Registry, along with any additional information about the initiator. You'll have to wait at least 5 working days for this process to be completed before you can take your first Direct Debit payment from a customer.

With the authorisation code, only Direct Debit payment requests from the the registered initiator will be debited to the acceptor's account. Each time a Direct Debit transaction happens, the acceptor's bank will be informed of the authorisation code. The bank will keep a record of this information.

If a customer decides to dispute a payment at a later date, the bank will use this authorisation code to identify which initiator requested the payment. Banks require you to have your own authorisation code in order to submit Direct Debit payments. But if you don’t want to use the direct route, a third-party provider, such as GoCardless, can submit payments on your behalf using their own authorisation code.

How do I get an authorisation code?

One option is to apply to your bank, which will then allocate you an authorisation code, once your business is approved. All New Zealand’s major banks in the BECS scheme can do this, but each will have its own requirements and processes for sponsorship. What's more, approving your business happens solely at your bank’s discretion. Learn more about applying directly via the bank for access to Direct Debit.

Using a third party authorisation code

For many businesses, it makes more sense to get an authorisation code via a third party provider. This is known as submitting indirectly. Using this approach still requires having an authorisation code, but the code is attached to the third party provider instead of directly to your business. This avoids the need for your business to satisfy the bank’s requirements. You simply need to find a suitable third party provider to work with.

Using authorisation codes via GoCardless

GoCardless is a third party Direct Debit provider, which uses its own authorisation code on your behalf. With GoCardless, there are no upfront costs to collect payments by Direct Debit. What’s more, as GoCardless collects payments under a single banking agreement, we achieve scale benefits which we can then pass on to our merchants.