Can I Set Up My Own Direct Debit Scheme Through My Bank?
You can, of course, apply to become a Direct Debit Service User (or Originator) yourself, provided your company has a suitably long trading history, you have an excellent relationship with your bank, and you are willing and able to provide your bank with sufficient securities.
Direct Debits can be collected only by companies that are BACS approved 'Originators' who are subject to stringent vetting procedures and have placed indemnity guarantees through their banks. Under the BACS Direct Debit Rules and Regulations, your bank must agree to be the sponsor who will take responsibility for your Direct Debit activities. Many businesses and organisations will fail to obtain approval from their banks because of the high risk and stringent criteria.
Furthermore, the application process, related costs, time-scale to implementation and other operational costs after setup (BACS software and Direct Debit Management software from approved suppliers) is lengthy and costly. You can generally expect total costs in the region of £5,000 to £10,000 plus annual licence fees and maintenance normally equivalent to 15% to 20% of the software costs.
Finally, you will be required to have your staff trained to use the scheduling and communications software and be proficient in the knowledge of all the Direct Debit Rules and Regulations. You will have to ensure that you always have sufficiently trained members of staff to do your collections on time.
There is another way. FastPay can sort out all the formalities on your behalf and have you up and running in less than 48 hours. Click here to see how.