Last editedJan 20222 min read
AUDDIS stands for Automated Direct Debit Instruction Service. It is a service operated by BACS (Bankers Automated Clearing Services). AUDDIS enables BACS members to send new direct debit instructions electronically.
The background to automated direct debits
Direct debits were an established method of payment long before the arrival of digital technology. In the early days of direct debits, direct debit instructions were completed on paper and sent to the relevant bank by post. Sometimes the payer did this themselves. Sometimes the collecting organisation took the details by phone and did it for them.
This approach was both slow and highly vulnerable to human error. As such it had the potential to be very frustrating for all concerned. The frustrations increased as other payment methods leveraged the opportunities provided by digital technology and the internet.
From a consumer perspective, the slow pace of the pre-AUDDIS direct debit service was a major barrier to consumer choice. The most obvious example of this was the amount of paperwork involved in changing from one bank to another (and the length of time this took).
Similarly, changing from one service provider to another (e.g. moving to a new utility company) could also be a painful experience.
AUDDIS, ADDACS and ARUDD
The AUDDIS system was introduced alongside the ADDACS and ARUDD systems. ADDACS stands for Automated Direct Debit Amendment and Cancellation Service and ARUDD stands for Automated Return of Unpaid Direct Debit. Between them, they cover the three key actions related to direct debits namely set-up, amendment and failure.
All three systems are standardised electronic messaging systems. With AUDDIS and ADDACS, the organisation setting up the direct debit collects the relevant information from the payer. They then convert this into the accepted format for communications via the BACS network and send it to the payer’s bank.
With ARUDD, a payer’s bank advises a collecting organisation of failed direct debits. If possible, they provide a specific reason for the failure. This can assist the collecting organisation in deciding what to do next.
The practicalities of AUDDIS
Because AUDDIS, ADDACS and ARUDD are proprietary messaging systems, the ability to use them is managed by their owner (i.e. BACS). Companies wishing to use these services directly, therefore, need to apply to BACS and demonstrate that they are capable of sending and receiving these messages correctly.
In order to send AUDDIS and ADDACS messages, companies need to be able to collect payer data appropriately (i.e. accurately and securely). They may need to store the data they collect in case a payer’s bank/building society needs to reference it. In order to make use of the messages sent by a payer’s bank/building society companies need to be able to access and understand their BACS reports.
These requirements mean that direct access to AUDDIS, ADDACS and ARUDD tends to be impractical for smaller companies. Fortunately, SMEs can get the benefits of AUDDIS, ADDACS and ARUDD without the challenges of direct implementation by using an intermediary service such as GoCardless.
The future of AUDDIS
AUDDIS, ADDACS and ARUDD have all been key to bringing direct debits into the digital age. For larger companies, they mean that payments can now be processed at scale with a reasonable level of speed and efficiency. For smaller companies, they open the door to using direct debits to automate and simplify payment collection.
Thanks to AUDDIS, ADDACS and ARUDD, payment data can now be collected and managed digitally from start to finish. This relieves smaller companies of the need to collect and store payment data securely. Instead, SMEs can use services such as GoCardless to manage the entire payment process for them, including taking care of the compliance requirements.
We can help
If you’re interested in finding out more about AUDDIS, then get in touch with our financial experts. Find out how GoCardless can help you with ad hoc payments or recurring payments.