Most of us benefit from the use of Direct Debit collection every month without thinking twice about it, but how many of us understand the jargon that often comes with them when we deal with the Debit process? From mandates to BACS and even indemnity claims, it’s important to understand exactly what each term means. Well, we’ve picked out some of the most common phrases to explain exactly what they mean, so next time you come across them you’ll be in the know.

One of the terms that’s most often associated with all things Direct Debit is ‘BACS’, and this simply means the clearing system used to administer the Debit scheme. Every Direct Debit communication must pass through the BACS system, and it stands for ‘Bankers Automated Clearing System’. You’ll sometimes see this written as ‘Bacs’.

You’ll sometimes see a Debit instruction referred to as a ‘Direct Debit mandate’, and it’s exactly the same thing. When you set up a Debit to make a regular payment to a business you’re giving an instruction to them to collect the funds, and a mandate is just another way of describing it.

Now this one’s important…’unpaid Direct Debits’! This term refers to any payments which have failed to be collected from your bank account as agreed in your Debit instruction. The most common reason behind an unpaid Debit is that there weren’t enough funds in the account to cover the payment, but there can be other reasons behind them too.

Lastly, it’s the very formal sounding ‘indemnity claim’. All Direct Debit payments are protected by the Direct Debit Guarantee, and one of its advantages is that means you’re entitled to put in an indemnity claim for a refund if a payment’s every taken from your account in error.

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