BACS Positioning

BACS Payments Schemes Ltd (BPSL) who manage the Direct Debit Scheme have worked with the Banks to endeavour to eliminate ID fraud through strong Scheme compliance. The figure below demonstrates how, with the advent of CHIP and PIN, ID fraud is moving out to affect other areas. Paperless instructions have been seen as a vulnerable area in particular, although KYC schemes are a key aspect and mandatory requirement of the Scheme.

BACS has therefore amended the Scheme on behalf of the Banks to mandate KYC checks. DD-iD™ is the first full-automated, online ID check in the UK and ensures compliancy with all of the mandatory requirements according to BPSL, the Scheme and the Banks.

Why BACS and the Banks Have Mandated ID Checks

1. Fraud is moving all of the time, as steps are taken to reduce fraud in one area (e.g. CHIP & PIN etc) then the fraudster will find another way…another door will open.

2. The pain of fraud for all of the stakeholders concerned is both costly and time consuming:

• Banks suffer financial loss and the hassle of dealing with the fraud
• For the Consumer there is financial loss, the hassle of dealing with the fraud and the negative impact on the consumers view of both the bank and the originator
• For the Originator there is financial loss, the hassle of dealing with the fraud as well as reputational risk and lost revenue opportunities

3. This led the banks to get together last year and make some changes to the Direct Debit Scheme Rules – to be regulated and enforced by BPSL- as follows:
The banks are now mandating the originators (for paperless DDIs only) to ensure:

• That the payers are who they say they are
• That they live where they say they live
• That the bank account belongs to them

4. DD-ID™ is the first and only tool in the market place that will address ALL THREE of the issues above with a series of real time checks as part of the initial DD instruction.

DD-iD™ does this by tying a person to an address to a bank account in real time, thus minimising the risk of fraud, whilst enabling full compliance of the revised Direct Debit Scheme Rules, as mandated by leading UK banks today.