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Direct debits for business.
How to become a direct debit initiator and manage regular customer payments.
What are direct debits?
Direct debits are a convenient way to collect regular payments from your customers.
Once you’re approved to accept direct debits, your customer can give you authority to take the amount owed from their bank account at regular intervals – which means they don’t need to remember to pay you, and you get paid the right amount on time.
Because you control the amount, date and reference data of each payment, it’s an easy way to manage a high volume of incoming payments and reconcile them.
If you’re a business or service provider that meets the requirements for becoming a direct debit initiator, we’ll work with you to determine if you’re a standard initiator, preferred initiator or paperless initiator. The main difference between these is the way you gain consent from your customers to debit their accounts.
Find out about standard initiators, preferred initiators and paperless initiators.
Types of direct debit initiators.
Standard initiator
Standard initiators are generally small or medium-sized businesses that receive a high volume of regular payments. As a standard initiator, your customer will need to provide you with a signed direct debit authority form that you deliver to their bank in person, by post or email. Once your customer’s bank has loaded the authority to their bank account, you can start collecting payments by direct debit.
If you deliver the form by email, you’ll need to securely store the original authority form for at least 120 days after the first transaction is sent under that authority and be able to provide it to your customer’s bank if requested. You may wish to retain the authority form, or a copy of it, for a longer period in line with your standard retention policy.
Preferred initiator
Preferred initiators are generally well-known organisations or service providers such as insurance companies, financial institutions, local authorities, public sector entities and utilities.
As a preferred initiator, you don’t need to send a signed direct debit authority form to your customer’s bank and wait for the authority to be loaded to their bank account. The authority is electronically loaded when you request your first payment.
You’ll need to securely store the original signed authority form (or an accurate record of it) for at least seven years after the last transaction is sent under that authority and be able to provide it to your customer’s bank if requested.
Paperless initiator
Paperless initiators generally meet the requirements of a preferred initiator but also have additional approval to set up direct debit payments online or over the phone. As a paperless direct debit initiator, you obtain authority from your customers in writing or verbally, but you don’t need your customer to provide you with a signed direct debit authority form. Your authorisation code is electronically loaded to their bank account when you collect your first payment.
You’ll need to securely store an accurate record of the details of the direct debit authority, and the authority details provided to your customer, for at least seven years after the last transaction is sent under that authority. You must be able to provide this information to your customer’s bank if requested.
Standard initiator.
What can I do as a standard initiator?
- You can send individual or recurring debits of variable amounts on specified dates (provided you comply with the notice requirements) – giving you complete control over how you collect payments.
- Payments can be settled to your bank account as combined or individual payments. (Additional transactional fees may apply for individual payments.)
- You can have separate accounts for receiving payments and dishonoured transactions – making it easier to spot failed payments.
- Reduces overpayments and the cost of processing refunds.
What you need to become a standard initiator
- We recommend you have at least 100 customers you will be debiting per month for this to be an effective way to accept regular payments. (You can only debit domestic New Zealand bank accounts.)
- Be a legal entity, for instance a registered company or incorporated society that conducts business in New Zealand.
- Have been a Westpac banking client for at least 12 months.
- Use one of Westpac’s electronic business banking channels – Business Online or Corporate Online.
- Have an ongoing billing relationship with the customers you will be direct debiting (for example, by providing a monthly subscription to a service).
- Have effective controls to reduce the potential for billing errors or ‘insider fraud’.
- Provide a debtor profile listing for the past 90 days that shows the amount of money your business is owed by your customers.
- Operate in full compliance with industry direct debit rules, as provided to you by Westpac.
- Be able to show us that you can securely store the original authority paper form for at least 120 days.
Additional requirements may apply depending on the type of business you operate and the way you accept payments in your business. Our team will work with you to help you understand your specific obligations.
Register your interest
Fill in the direct debit registration of interest form with your details.
Direct debit registration of interest form
Talk to our team
If you have a relationship manager (RM) who looks after your business, they will contact you.
If your business is not managed by an RM, one of our product managers will contact you.
Find out which direct debit service is right for you
Your RM or product manager will do a review to check if direct debits are suited to your business and which direct debit type (standard, preferred or paperless) would best suit your business needs.
Complete the application form
Once your RM or product manager has confirmed the direct debit service will meet your business requirements, and you’ve met Westpac’s credit criteria, they’ll provide you with an application form that explains your terms and conditions as well as fees and charges for your service. Your application form must be signed, dated and returned to us.
Wait for your authorisation code to be issued
Once you’re approved, you’ll be provided with a unique initiator authorisation code and your direct debit status will be updated on the Payments NZ bank direct debit register. Other banks use this register to update their own records with the new initiator code.
You’ll need to allow at least 10 working days from the date you’ve been provided with the initiator number for all banks to update their direct debit registers. You won’t be able to begin debiting your customer’s bank account until your customer’s bank has completed this process. If you try to process a direct debit before your customer’s bank has updated their records, it will be rejected as unauthorised.
Design your authority form
You’ll need to design your authority form (following industry rules provided in this guide) and have it approved by Westpac.
Update your system if required
If there are any changes required to your finance system to create a file of customers and amounts to be billed for importing into online banking, you’ll need to arrange these changes.
We’re here to help
Your RM or product manager will guide you through the rest of the process, including setting up online banking if you don’t already have it, to process direct debits.
Designing a direct debit authority form
The layout and content of the authority form are governed by industry rules. You can download and use our templates or design your own. Whether you design your own form or use one of our templates, you must follow these rules:
- Include your branding, address and other information about your business in the ‘Header’ area only.
- Don’t make any changes to the required layout of the form, including the placement or order of the fields that your customer (the acceptor) must fill in.
- Don’t remove or make any changes to the terms and conditions as set out in the template.
- Enter your authorisation code in the ‘authorisation code’ field.
- Once completed, your authority form must be emailed to Westpac in a Word compatible document or PDF format for approval before it can be used.
Which template should I use?
When you apply for your direct debit facility, you’ll be approved for one of the following notice periods. (The standard notice period is ten days.) This refers to the amount of notice you need to give your customers before you debit their account. Your authority form terms and conditions must include the notice period you are approved for by Westpac.
|
Notice period |
Type of payment |
Frequency |
Example |
|
Two business days |
Variable payment |
Weekly/fortnightly |
Business-to-business (B2B) payment |
|
10 calendar days |
Variable payment |
Monthly/annual |
Power/phone bills |
|
10 calendar days before the date of the first direct debit in the series. |
Regular payment |
Scheduled |
Insurance premiums or memberships/subscription payments |
|
Same day |
Variable payment |
No later than the date of the direct debit |
Specifically requested by the customer |
You can find more information in the ‘Providing notice to your customer’ section of this guide.
Authority form templates
- Use the form with the notice period you are approved for by Westpac.
- Download the form, then open with Adobe Acrobat Reader to enter your company details in the editable fields.
- If you’d like to upload your company logo, make sure the file is in a PNG format and sized to 860 x 460 pixels.
Two business days authority form template (PDF)
10 calendar days (standard) authority form template (PDF)
10 calendar days (scheduled) authority form template (PDF)
Same day authority form template (PDF)
Loading an authority
- Positively identify your customer and confirm they have the right to authorise debits for the bank account numbers they have provided (for example, check whether the account you are debiting is a joint or ‘two to sign’ account).
- Print out your direct debit authority form that has been approved by Westpac.
- Make sure your customer signs the authority form in person, not digitally. This means it must be a handwritten signature, not a scanned signature.
- Deliver the original form to your customer’s bank by post or in person, or a copy of the original form by email if your customer’s bank specifies an email address in the below PNZ register.
- If you deliver the form by email, you’ll need to securely store the original authority form for at least 120 days after the first transaction is sent under that authority and be able to provide it to your customer’s bank if requested. You may wish to retain the authority form, or a copy of it, for a longer period in line with your standard retention policy.
- After receiving the authority, your customer’s bank will either load the authorisation code against your customer’s account or return the instruction ‘Authority Refused’. They’re not required to give a reason for this decision.
Delivering an authority
An authority form can be delivered to your customer’s bank to be registered or loaded in the following ways:
- In person
- Post or courier
- Email (if the customer’s bank specifies an email address in the below PNZ register)
In person
- You, as the initiator, can deliver the authority to your customer’s bank in person. It’s recommended you keep a copy for your records.
Post/courier
- Post or courier the authority to the address on the below table.
- Wait at least 10 business days after sending the form to your customer’s bank so that the bank has time to receive and load the authority.
- If you want confirmation your customer’s bank has received and loaded an authority, you’ll need to send a pre-paid self-addressed envelope with the authority.
- Email a copy of the signed authority to your customer’s bank using the email address on the below table.
- If delivering the authority by email you must:
- Make sure only one authority is attached to each email as a PDF document
- Write ‘Direct debit authority for loading’ in the subject line of the email
- Keep the original signed authority for 120 calendar days after the date of the first transaction and, if requested, provide the original to your customer’s bank within this period. You may wish to retain the authority form, or a copy of it, for a longer period in line with your standard retention policy.
Payments NZ (PNZ) register of addresses for completed authorities
|
Bank |
Postal address for paper authority forms |
Email address for scanned authority forms |
|
ANZ Bank Ltd |
Transaction services, Maintenance Team PO Box 146 WELLINGTON 6140 |
|
|
ASB Bank Ltd |
Direct Debit Administration Officer National Support Centre PO Box 35 AUCKLAND 1140 |
|
|
Bank of China (New Zealand) Ltd |
Financial Operations Department Level 17 205 Queens Street AUCKLAND 1010 |
|
|
Bank of New Zealand (BNZ) |
AP and DD Team Private Bag 39 806 Wellington Mail Centre LOWER HUTT 5045 |
|
|
China Construction Bank |
Operations Department PO Box 305 Shortland Street AUCKLAND 1140 |
|
|
Citibank N.A. |
GCMS Operations PO Box 3429 AUCKLAND 1140 |
newzealand.operations@citi.com
|
|
The Hong Kong and Shanghai Banking Corporation Ltd |
Payment Services Department PO Box 5947 Wellesley Street AUCKLAND 1141 |
|
|
Industrial and Commercial Bank of China (New Zealand) Ltd |
Settlements Manager PO Box 106 656 AUCKLAND 1143 |
No email allowed – postal address only |
|
Kiwibank Ltd |
Customer Operations Private Bag 39 888 Wellington Mail Centre LOWER HUTT 5045 |
|
|
TSB Bank Ltd |
TSB Bank Ltd PO Box 240 NEW PLYMOUTH 4340 |
|
|
Westpac New Zealand Ltd |
Account Maintenance Team Account Services Support Unit PO Box 203 CHRISTCHURCH 8140 |
These addresses are correct as at 18 May 2023 and are subject to change. Get in touch if you’d like to confirm any of the details.
How much notice do I need to give before debiting my customer’s bank account?
You must provide your customer with notification of the amount that will be debited. When you apply for your direct debit facility, you’ll be approved for one of the following notice periods.
Weekly/fortnightly direct debits: Two business days’ notice
This notice is used for weekly or fortnightly direct debits that are regular in frequency and variable in amount – for example, weekly deliveries of goods from a wholesaler to a retailer.
- Send the notice in writing using the method agreed by your customer (for example – mail, email or SMS).
- Make sure your customer has received it no less than two business days and no more than two calendar months before the date of the debit.
- Include the steps your customer can take if they dispute the direct debit.
Monthly/annual direct debits: Ten calendar days’ notice
This is the standard notice period. It’s used for monthly or annual direct debits that are regular in frequency and variable in amount – for example, utility bills.
- Send the notice in writing using the method agreed by your customer (for example, mail, email or SMS).
- Make sure your customer has received it no less than ten calendar days and no more than two calendar months before the date of the debit.
- Include the steps your customer can take if they dispute the direct debit.
Scheduled direct debits: Ten calendar days before the date of the first direct debit in the series
This notice is used for instalment payments where a contractual arrangement exists between you and your customer – for example, insurance or hire purchase payments. The interval between direct debits must be regular and no more than 12 months. If you propose to change an amount or date of a direct debit specified in the notice, you must give your customer no less than 30 calendar days’ notice.
- Send the notice in writing using the method agreed by your customer (for example, mail, email or SMS).
- Make sure your customer has received it no less than ten calendar days and no more than two calendar months before the first debit.
- Include the following:
- The date of the first debit
- The frequency of direct debit payments
- The amount of each direct debit or, if the amount varies, a schedule specifying each amount and date
- The steps your customer can take if they dispute a direct debit.
Same-day notice: No later than the date of the direct debit
- This notice period is used when a customer has requested a direct debit on a particular day.
- Send the notice in writing using the method agreed by your customer (for example, mail, email or SMS).
- Make sure your customer has received it no later than the date of the direct debit.
How to debit your customer’s bank account
- Send a direct debit request to your customer’s bank account by submitting a payment file to Westpac. Your payment file must be generated from your finance system or your online banking platform – Business Online (BOL) or Corporate Online (COL).
- Direct debits or batches of direct debits will be created by your accounting, financial management or other system in the correct file format. This is usually as a fixed length or ‘comma separated values’ (csv) file. Check the product documentation for your accounting or financial management system to determine what steps are needed to create direct debit batches in the necessary file format.
- This file will then be imported by Business Online or Corporate Online for validation, authorisation and processing.
- Include your unique authorisation code in the transaction record. Your customer’s bank will use this code when processing the direct debit to confirm that a valid authority exists.
- The payment is settled to your bank account on the due date with your specified reference data.
- If the direct debit instruction is challenged by your customer, and you hold the original authority form, you must be able to provide the original authority form to the customer’s bank within five business days.
Where to get help
Contact our helpdesk if you need help importing payment batches into Business Online or Corporate Online.
Corporate Online
Call 0800 423 424, weekdays 8.30am to 5.30pm
Visit Corporate Online Banking
Business Online
Call 04 499 0410, weekdays 8:30am to 5:30pm
Visit Business Online
When will the direct debit be processed?
Direct debit payments are processed 365 days a year, including weekends and public holidays. Your customer must have available funds in their account by close of processing on the due date, otherwise the debit will be dishonoured. This is known as ‘funds dishonour’.
What is a direct debit dishonour?
If we send a direct debit and your customer’s bank decides not to process it (for example, if there are insufficient funds in the account) it will be dishonoured. Your customer’s bank will return the request with the reason why it is dishonoured.
There are two categories of direct debit dishonours:
- Technical dishonours
- Funds dishonours
Technical dishonours
Technical dishonours can happen if:
- Your authorisation code or number is not recognised as valid – for example if your customer’s bank has not updated their register with your authorisation code.
- Your customer’s bank has not yet loaded the authority for the account that needs to be debited.
- The authority can’t be loaded because the account does not support direct debits (for example, certain savings accounts).
- There was a valid authority, but it’s been cancelled by your customer.
- Your customer’s account has been closed or suspended.
In most cases technical dishonours are returned you on the same business day as the original debit transaction.
Funds dishonours
Funds dishonours can happen if:
- Your customer doesn’t have sufficient funds in their account (including any available overdraft) to cover the direct debit.
- Your customer has stopped or revoked a direct debit payment but not cancelled the authority.
In most cases funds dishonours will be returned to you on the same business day as the original direct debit was due to be processed.
Dishonour answers
Your customer’s bank will communicate the reason why a direct debit transaction is unpaid or returned, by entering one of the following dishonour answers in the ‘particulars’ field of that record. This will overwrite any ‘particulars’ value you provided when you sent the original direct debit file.
|
Code |
Answer |
|
01 |
Unauthorised |
|
02 |
No account |
|
03 |
Insufficient funds (refer to debtor) |
|
04 |
Stopped (payment suspended) |
|
05 |
Cancelled (authority closed) |
|
06 |
Account closed |
|
07 |
Transferred |
|
08 |
Limit exceeded |
Retry after a dishonour
If your customer’s bank dishonours a direct debit with the answer ‘insufficient funds’, you may send one additional direct debit for the same amount within five business days of the original transaction, without giving notice.
What’s the timeframe for a direct debit dishonour?
Technical and funds dishonours must be processed no later than the next calendar day.
If your customer disputes your right to debit their account or claims you did not provide enough notice to debit their account, they have 120 days to challenge the direct debit. If you can’t show evidence that you have authority to debit your customer’s account or that you provided your customer with the required notice, you’ll need to return the money you debited from their account.
What’s sufficient evidence?
- Signed paper direct debit authority or
- Proof that the authority has been scanned and emailed to your customer’s bank or
- Proof that the required notice of direct debit was provided to the customer.
What happens if an authority is suspended?
If the authority has been suspended by the customer’s bank (for example, if fraud is suspected) direct debits will be dishonoured under the ‘unauthorised’ code. If the authority is resumed, direct debits will resume processing as usual.
Who is responsible for resolving a dispute?
Transaction complies with the authority
If the direct debit transaction complies with the authority and the dispute is about the payment (for example, the customer disputes the amount of money that has been debited from their account), you’ll need to resolve this with your customer.
Transaction doesn’t comply/invalid authority
If the transaction does not comply with the authority (for example, you haven’t provided your customer with the required notice before debiting their account) or if a valid authority does not exist, you may be liable to Westpac or the customer’s bank for the transaction.
Fraud or authority invalid or missing
Your customer’s bank may recover the disputed amount if they believe the authority is fraudulent, forged, or the result of an error, or the person who signed the authority did not have the authority to do so.
Amount of debit different from amount notified
Your customer’s bank may recover the disputed amount directly from your account up to 120 calendar days after the date of the direct debit, if the amount debited was different to the amount notified, or not debited in accordance with the terms and conditions of the authority. Your customer may also be able to claim unauthorised direct debits back from you at any time.
A reversal of a direct debit that has been disputed does not affect the underlying obligation between you and your customer. This means your customer may be responsible for money owed to your business even if they decide to dispute the direct debit.
How to help reduce fraud
Have a refund policy in place to make sure payments are only credited to the account that paid the direct debit if a dispute happens.
Keeping records
You must keep direct debit authority forms for at least 120 days after the first direct debit transaction sent under that authority. Beyond that period, we recommend that you securely store a record of direct debit authority forms you receive from customers under the same policy you use for your customer agreements, in case of future disputes from customers about payments.
You may also choose to keep records that prove your compliance with the terms of the authority. This may mean you keep direct debit documents for a certain period after your customer relationship ends, depending on your internal policy.
Change of bank or bank account that is debited
If your customer changes the bank account they use to pay you by direct debit, either with the same bank or another bank, they can provide you with the new bank account so you can get a new authority or ask their new bank to use the ‘switching’ process.
How the switching process works
‘Switching’ is an interbank process managed by Payments NZ rules and procedures that allows you to update your customer’s bank account without gaining a new authority.
If your customer chooses to use the switching process, their new bank will provide you with a ‘direct debit initiator transfer advice’ that contains the following instruction:
“Your customer has changed the account the customer uses to pay you direct debits and has authorised us to ask you to change the account details you use for direct debit transactions against your customer’s account effective from [insert effective date] as follows:
– [Acceptor’s name]
– [Old account number]
– [New account number]
– [Reference details to identify acceptor].”
You can request a copy of the switching bank request form signed by your customer if you need to save this instruction for your records.
Change to your business or change of ownership
You’ll need to let us know if:
- You want to make changes to the ownership of your authorisation code or stop direct debiting. We’ll provide you with instructions on what to do next.
- You intend to change the legal name but not the ownership or nature of business. We’ll need to update the Payments NZ register with your new details.
Preferred initiator.
What can I do as a preferred initiator?
- There’s no need for your customer’s bank to manually load an authorisation code to your customer’s account – speeding up the set-up process.
- You can send individual or recurring debits of variable amounts on specified dates (provided you comply with the notice requirements) – giving you complete control over how you collect payments.
- Payments can be settled to your bank account as aggregated or individual payments. (Additional transactional fees may apply for individual payments.)
- You can have separate accounts for receiving payments and dishonoured transactions – making it easier to spot failed payments.
- Reduces overpayments and the cost of processing refunds.
What you need to become a preferred initiator
- Be a legal entity, for instance a registered company or incorporated society that conducts business in New Zealand
- Have been a Westpac banking client for at least 12 months.
- Use one of Westpac’s electronic banking channels – Business Online, Westpac One for Business or Corporate Online.
- Have an ongoing billing relationship with the customers you will be direct debiting (for example, by providing a monthly subscription to a service).
- Have over 500 customers you will be debiting per month. (You can only debit domestic New Zealand bank accounts.)
- Have effective controls to reduce the potential for billing errors or ‘insider fraud’.
- Provide a debtor profile listing for the past 90 days that shows the amount of money your business is owed by your customers.
- Operate in full compliance with industry direct debit rules, as provided to you by Westpac.
- Be able to show us that you can securely store the original authority paper form for seven years after the final transaction.
Additional requirements may apply depending on the type of business you operate and the way you accept payments in your business. Our team will work with you to help you understand your specific obligations.
Register your interest
Fill in the direct debit registration of interest form with your details.
Direct debit registration of interest form
Talk to our team
If you have a relationship manager (RM) or a transactional solutions manager (TSM) who looks after your business, they will contact you.
If your business is not managed by an RM or TSM, one of our product managers will contact you.
Find out which direct debit service is right for you
Your RM, TSM or product manager will do a review to check if direct debits are suited to your business and which direct debit type (standard, preferred or paperless) would best suit your business needs.
Complete the application form
Once your RM, TSM or product manager has confirmed the direct debit service will meet your business requirements, and you’ve met Westpac’s credit criteria, they’ll provide you with an application form that explains your terms and conditions as well as fees and charges for your service. Your application form must be signed, dated and returned to us.
Wait for your authorisation code to be issued
Once you’re approved, you’ll be provided with a unique initiator authorisation code and your direct debit status will be updated on the Payments NZ bank direct debit register. Other banks use this register to update their own records with the new initiator code.
You’ll need to allow at least 10 working days from the date you’ve been provided with the initiator number for all banks to update their direct debit registers. You won’t be able to begin debiting your customer’s bank account until your customer’s bank has completed this process. If you try to process a direct debit before your customer’s bank has updated their records, it will be rejected as unauthorised.
Design your authority form
You’ll need to design your authority form (following industry rules provided in this guide) and have it approved by Westpac.
Update your system if required
If there are any changes required to your finance system to create a file of customers and amounts to be billed for importing into online banking, you’ll need to arrange these changes.
We’re here to help
Your RM, TSM or product manager will guide you through the rest of the process, including setting up online banking if you don’t already have it, to process direct debits.
Designing a direct debit authority form
The layout and content of the authority form are governed by industry rules. You can download and use our templates or design your own. Whether you design your own form or use one of our templates, you must follow these rules:
- Include your branding, address and other information about your business in the ‘Header’ area only.
- Don’t make any changes to the required layout of the form, including the placement or order of the fields that your customer (the acceptor) must fill in.
- Don’t remove or make any changes to the terms and conditions as set out in the template.
- Enter your authorisation code in the ‘authorisation code’ field.
- Once completed, your authority form must be emailed to Westpac in a Word compatible document or PDF format for approval before it can be used.
Which template should I use?
When you apply for your direct debit facility, you’ll be approved for one of the following notice periods. (The standard notice period is ten days.) This refers to the amount of notice you need to give your customers before you debit their account. Your authority form terms and conditions must include the notice period you are approved for by Westpac.
|
Notice period |
Type of payment |
Frequency |
Example |
|
Two business days |
Variable payment |
Weekly/fortnightly |
Business-to-business (B2B) payment |
|
10 calendar days |
Variable payment |
Monthly/annual |
Power/phone bills |
|
10 calendar days before the date of the first direct debit in the series. |
Regular payment |
Scheduled |
Insurance premiums or memberships/subscription payments |
|
Same day |
Variable payment |
No later than the date of the direct debit |
Specifically requested by the customer |
You can find more information in the ‘Providing notice to your customer’ section of this guide.
Authority form templates
- Use the form with the notice period you are approved for by Westpac.
- Download the form, then open with Adobe Acrobat Reader to enter your company details in the editable fields.
- If you’d like to upload your company logo, make sure the file is in a PNG format and sized to 860 x 460 pixels.
Two business days authority form template (PDF)
10 calendar days (standard) authority form template (PDF)
10 calendar days (scheduled) authority form template (PDF)
Same day authority form template (PDF)
Loading an authority
- Positively identify your customer and confirm they have the right to authorise debits for the bank account numbers they have provided (for example, check whether the account you are debiting is a joint or ‘two to sign’ account).
- Print out your direct debit authority form that has been approved by Westpac.
- Make sure your customer signs the authority form in person, not digitally. This means it must be a handwritten signature, not a scanned signature.
- The authorisation code is electronically loaded to your customer’s bank account when you request your first payment from their bank by submitting a payment file.
- You must safely store the signed paper authority form and be able to provide it to your customer’s bank if requested up to seven years after the last debit was made under that authority. If you can’t produce a valid form that proves you’re allowed to debit the customer, all direct debit transactions sent under that authority may be reversed.
How much notice do I need to give before debiting my customer’s bank account?
You must provide your customer with notification of the amount that will be debited. When you apply for your direct debit facility, you’ll be approved for one of the following notice periods.
Weekly/fortnightly direct debits: Two business days’ notice
This notice is used for weekly or fortnightly direct debits that are regular in frequency and variable in amount – for example, weekly deliveries of goods from a wholesaler to a retailer.
- Send the notice in writing using the method agreed by your customer (for example – mail, email or SMS).
- Make sure your customer has received it no less than two business days and no more than two calendar months before the date of the debit.
- Include the steps your customer can take if they dispute the direct debit.
Monthly/annual direct debits: Ten calendar days’ notice
This is the standard notice period. It’s used for monthly or annual direct debits that are regular in frequency and variable in amount – for example, utility bills.
- Send the notice in writing using the method agreed by your customer (for example, mail, email or SMS).
- Make sure your customer has received it no less than ten calendar days and no more than two calendar months before the date of the debit.
- Include the steps your customer can take if they dispute the direct debit.
Scheduled direct debits: Ten calendar days before the date of the first direct debit in the series
This notice is used for instalment payments where a contractual arrangement exists between you and your customer – for example, insurance or hire purchase payments. The interval between direct debits must be regular and no more than 12 months. If you propose to change an amount or date of a direct debit specified in the notice, you must give your customer no less than 30 calendar days’ notice.
- Send the notice in writing using the method agreed by your customer (for example, mail, email or SMS).
- Make sure your customer has received it no less than ten calendar days and no more than two calendar months before the first debit.
- Include the following:
- The date of the first debit
- The frequency of direct debit payments
- The amount of each direct debit or, if the amount varies, a schedule specifying each amount and date
- Include the steps your customer can take if they dispute the direct debit.
Same-day notice: No later than the date of the direct debit
- This notice period is used when a customer has requested a direct debit on a particular day.
- Send the notice in writing using the method agreed by your customer (for example, mail, email or SMS).
- Make sure your customer has received it no later than the date of the direct debit.
How to debit your customer’s bank account
- Send a direct debit request to your customer’s bank account by submitting a payment file to Westpac. Your payment file must be generated from your finance system or your online banking platform – Business Online (BOL) or Corporate Online (COL).
- Direct debits or batches of direct debits will be created by your accounting, financial management or other system in the correct file format. This is usually as a fixed length or ‘comma separated values’ (csv) file. Check the product documentation for your accounting or financial management system to determine what steps are needed to create direct debit batches in the necessary file format.
- This file will then be imported by Business Online or Corporate Online for validation, authorisation and processing.
- Include your unique authorisation code in the transaction record. Your customer’s bank will use this code when processing the direct debit to confirm that a valid authority exists.
- The payment is settled to your bank account on the due date with your specified reference data.
- If the direct debit instruction is challenged by your customer, you must be able to produce a copy of the original direct debit authorisation to the customer’s bank within five business days.
Where to get help
Contact our helpdesk if you need help importing payment batches into Business Online or Corporate Online.
Corporate Online
Call 0800 423 424, weekdays 8.30am to 5.30pm
Visit Corporate Online Banking
Business Online
Call 04 499 0410, weekdays 8:30am to 5:30pm
Visit Business Online
When will the direct debit be processed?
Direct debit payments are processed 365 days a year, including weekends and public holidays. Your customer must have available funds in their account by close of processing on the due date, otherwise the debit will be dishonoured. This is known as ‘funds dishonour’.
What is a direct debit dishonour?
If we send a direct debit and your customer’s bank decides not to process it (for example, if there are insufficient funds in the account) it will be dishonoured. Your customer’s bank will return the request with the reason why it is dishonoured.
There are two categories of direct debit dishonours:
- Technical dishonours
- Funds dishonours
Technical dishonours
Technical dishonours can happen if:
- Your authorisation code or number is not recognised as valid – for example if your customer’s bank has not updated their register with your authorisation code.
- Your customer’s bank has not yet loaded the authority for the account that needs to be debited.
- The authority can’t be loaded because the account does not support direct debits (for example, certain savings accounts).
- There was a valid authority, but it’s been cancelled by your customer.
- Your customer’s account has been closed or suspended.
In most cases technical dishonours are returned you on the same business day as the original debit transaction.
Funds dishonours
Funds dishonours can happen if:
- Your customer doesn’t have sufficient funds in their account (including any available overdraft) to cover the direct debit.
- Your customer has stopped or revoked a direct debit payment but not cancelled the authority.
In most cases funds dishonours will be returned to you on the same business day as the original direct debit was due to be processed.
Dishonour answers
Your customer’s bank will communicate the reason why a direct debit transaction is unpaid or returned, by entering one of the following dishonour answers in the ‘particulars’ field of that record. This will overwrite any ‘particulars’ value you provided when you sent the original direct debit file.
|
Code |
Answer |
|
01 |
Unauthorised |
|
02 |
No account |
|
03 |
Insufficient funds (refer to debtor) |
|
04 |
Stopped (payment suspended) |
|
05 |
Cancelled (authority closed) |
|
06 |
Account closed |
|
07 |
Transferred |
|
08 |
Limit exceeded |
Retry after a dishonour
If your customer’s bank dishonours a direct debit with the answer ‘insufficient funds’, you may send one additional direct debit for the same amount within five business days of the original transaction, without giving notice.
What’s the timeframe for a direct debit dishonour?
Technical and funds dishonours must be processed no later than the next calendar day. If your customer disputes your right to debit their account or claims you did not provide enough notice to debit their account, they have 120 days to challenge the direct debit.
If you can’t show evidence that you have authority to debit your customer’s account or that you provided your customer with the required notice, you’ll need to return the money you debited from their account.
What’s sufficient evidence?
- Signed paper direct debit authority or
- Proof that the authority has been scanned and emailed to your customer’s bank or
- Proof that the required notice of direct debit was provided to the customer.
What happens if an authority is suspended?
If the authority has been suspended by the customer’s bank (for example, if fraud is suspected) direct debits will be dishonoured under the ‘unauthorised’ code. If the authority is resumed, direct debits will resume processing as usual.
Who is responsible for resolving a dispute?
Transaction complies with the authority
If the direct debit transaction complies with the authority and the dispute is about the payment (for example, the customer disputes the amount of money that has been debited from their account), you’ll need to resolve this with your customer.
Transaction doesn’t comply/invalid authority
If the transaction does not comply with the authority (for example, you haven’t provided your customer with the required notice before debiting their account) or if a valid authority does not exist, you may be liable to Westpac or the customer’s bank for the transaction.
Fraud or authority invalid or missing
Your customer’s bank may recover the disputed amount if they believe the authority is fraudulent, forged, or the result of an error, or the person who signed the authority did not have the authority to do so.
Amount of debit different from amount notified
Your customer’s bank may recover the disputed amount directly from your account up to 120 calendar days after the date of the direct debit, if the amount debited was different to the amount notified, or not debited in accordance with the terms and conditions of the authority. Your customer may also be able to claim unauthorised direct debits back from you at any time.
A reversal of a direct debit that has been disputed does not affect the underlying obligation between you and your customer. This means your customer may be responsible for money owed to your business even if they decide to dispute the direct debit.
How to help reduce fraud
Have a refund policy in place to make sure payments are only credited to the account that paid the direct debit if a dispute happens.
Keeping records
You must keep direct debit authority forms for at least seven years after the date of the final direct debit transaction sent under the form. Beyond that period, we recommend that you securely store a record of direct debit authority forms you receive from customers under the same policy you use for your customer agreements, in case of future disputes from customers about payments.
You may also choose to keep records that prove your compliance with the terms of the authority. This may mean you keep direct debit documents for a certain period after your customer relationship ends, depending on your internal policy.
Change of bank or bank account that is debited
If your customer changes the bank account they use to pay you by direct debit, either with the same bank or another bank, they can provide you with the new bank account so you can get a new authority or ask their new bank to use the ‘switching’ process.
How the switching process works
‘Switching’ is an interbank process managed by Payments NZ rules and procedures that allows you to update your customer’s bank account without gaining a new authority.
If your customer chooses to use the switching process, their new bank will provide you with a ‘direct debit initiator transfer advice’ that contains the following instruction:
“Your customer has changed the account the customer uses to pay you direct debits and has authorised us to ask you to change the account details you use for direct debit transactions against your customer’s account effective from [insert effective date] as follows:
– [Acceptor’s name]
– [Old account number]
– [New account number]
– [Reference details to identify acceptor].”
You can request a copy of the switching bank request form signed by your customer if you need to save this instruction for your records.
Change to your business or change of ownership
You’ll need to let us know if:
- You want to make changes to the ownership of your authorisation code or stop direct debiting. We’ll provide you with instructions on what to do next.
- You intend to change the legal name but not the ownership or nature of business. We’ll need to update the Payments NZ register with your new details.
As a preferred initiator, you don’t have to send a paper authority form to your customer’s bank for loading when you first set up a direct debit authority (unless requested by the bank), but if you want to re-instate a direct debit authority after a customer has cancelled it you will need to follow the same process as a standard initiator.
How to re-instate a direct debit authority
Provide a completed and signed authority form to your customer’s bank to be registered or loaded:
- In person
- By post or courier
- By email (if the customer’s bank specifies an email address in the below PNZ register)
In person
- You, as the initiator, can deliver the authority to your customer’s bank in person. It’s recommended you keep a copy for your records.
Post/courier
- Post or courier the authority to the address on the below table.
- Wait 10 business days after sending the form to your customer’s bank so that the bank has time to receive and load the authority.
- If you want confirmation your customer’s bank has received and loaded an authority, you’ll need to send a pre-paid self-addressed envelope with the authority.
- Email a copy of the signed authority to your customer’s bank using the email address on the below table.
- If delivering the authority by email you must:
- Make sure only one authority is attached to each email as a PDF document
- Write ‘Direct debit authority for loading’ in the subject line of the email
- Keep the original signed authority for 120 calendar days after the date of the first transaction and, if requested, provide the original to your customer’s bank within this period. You may wish to retain the authority form, or a copy of it, for a longer period in line with your standard retention policy.
- Keep the copy of the scanned authority for seven years after the last transaction sent under that authority and, if requested, provide it to Westpac or your customer’s bank within this period.
Payments NZ (PNZ) register of addresses for completed authorities.
|
Bank |
Postal address for paper authority forms
|
Email address for scanned authority forms |
|
ANZ Bank Ltd
|
Transaction services, Maintenance Team PO Box 146 WELLINGTON 6140 |
|
|
ASB Bank Ltd
|
Direct Debit Administration Officer National Support Centre PO Box 35 AUCKLAND 1140 |
PaymentandCustSuppAPDD@asb.co.nz
|
|
Bank of China (New Zealand) Ltd |
Financial Operations Department Level 17 205 Queens Street AUCKLAND 1010 |
|
|
Bank of New Zealand (BNZ)
|
AP and DD Team Private Bag 39 806 Wellington Mail Centre LOWER HUTT 5045 |
|
|
China Construction Bank |
Operations Department PO Box 305 Shortland Street AUCKLAND 1140 |
|
|
Citibank N.A. |
GCMS Operations PO Box 3429 AUCKLAND 1140 |
newzealand.operations@citi.com
|
|
The Hong Kong and Shanghai Banking Corporation Ltd |
Payment Services Department PO Box 5947 Wellesley Street AUCKLAND 1141 |
|
|
Industrial and Commercial Bank of China (New Zealand) Ltd |
Settlements Manager PO Box 106 656 AUCKLAND 1143 |
No email allowed – postal address only |
|
Kiwibank Ltd |
Customer Operations Private Bag 39 888 Wellington Mail Centre LOWER HUTT 5045 |
|
|
TSB Bank Ltd |
TSB Bank Ltd PO Box 240 NEW PLYMOUTH 4340 |
|
|
Westpac New Zealand Ltd |
Account Maintenance Team Account Services Support Unit PO Box 203 CHRISTCHURCH 8140 |
These addresses are correct as at 18 May 2023 and are subject to change. Get in touch if you’d like to confirm any of the details.
Paperless initiator.
What can I do as a paperless initiator?
- Set up direct debits over the phone or through your website.
- There’s no need to send your customer’s bank a signed authority form before collecting payments – speeding up the set-up process.
- You can send individual or recurring direct debits of variable amounts on specified dates (provided you comply with the notice requirements) – giving you complete control over how you collect payments.
- You can have separate accounts for receiving payments and dishonoured transactions – making it easier to spot failed payments.
- Reduces overpayments and the cost of processing refunds.
What you need to become a paperless initiator
- Be a legal entity, for instance a registered company or incorporated society that conducts business in New Zealand
- Have been a Westpac banking client for at least 12 months.
- Use one of Westpac’s electronic banking channels – Business Online or Corporate Online.
- Have an ongoing billing relationship with the customers you will be direct debiting (for example, by providing a monthly subscription to a service).
- Have over 1000 customers you will be debiting per month. (You can only debit domestic New Zealand bank accounts.)
- Have effective controls to reduce the potential for billing errors or ‘insider fraud’.
- Provide a debtor profile listing for the past 90 days that shows the amount of money your business is owed by your customers.
- Operate in full compliance with industry direct debit rules, as provided to you by Westpac.
- Be able to show us that you can securely store proof of your entitlement to debit for up to seven years after the final transaction.
Additional requirements may apply depending on the type of business you operate and the way you accept payments in your business. Our team will work with you to help you understand your specific obligations.
Register your interest
Fill in the direct debit registration of interest form with your details.
Direct debit registration of interest form
Talk to our team
If you have a relationship manager (RM) or a transactional solutions manager (TSM) who looks after your business, they will contact you.
If your business is not managed by an RM or TSM, one of our product managers will contact you.
Find out which direct debit service is right for you
Your RM, TSM or product manager will do a review to check if direct debits are suited to your business and which direct debit type (standard, preferred or paperless) would best suit your business needs.
Complete the application form
Once your RM, TSM or product manager has confirmed the direct debit service will meet your business requirements, and you’ve met Westpac’s credit criteria, they’ll provide you with an application form that explains your terms and conditions as well as fees and charges for your service. Your application form must be signed, dated and returned to us.
Wait for your authorisation code to be issued
Once you’re approved, you’ll be provided with a unique initiator authorisation code and your direct debit status will be updated on the Payments NZ bank direct debit register. Other banks use this register to update their own records with the new initiator code.
You’ll need to allow at least 10 working days from the date you’ve been provided with the initiator number for all banks to update their direct debit registers. You won’t be able to begin debiting your customer’s bank account until your customer’s bank has completed this process. If you try to process a direct debit before your customer’s bank has updated their records, it will be rejected as unauthorised.
Design your authority form
You’ll need to design your authority form (following industry rules provided in this guide) and have it approved by Westpac. As a paperless initiator, you’ll only need to use this form when gaining consent to debit ‘two to sign’ accounts.
Update your system if required
If there are any changes required to your finance system to create a file of customers and amounts to be billed for importing into online banking, you’ll need to arrange these changes.
We’re here to help
Your RM, TSM or product manager will guide you through the rest of the process, including setting up online banking if you don’t already have it, to process direct debits.
As a paperless initiator, you don’t need a signed paper authority form from your customer. Instead, you can gain authorisation to debit their account by recording their consent over the phone (through your call centre) or online (through your secure webpage or app). Westpac must review and approve all scripting, forms and web pages used for receiving paperless direct debit authorities as part of the initial set up process.
Verifying your customer
We recommend verifying your customer’s identity before approving them for a direct debit facility by following a Know Your Customer (KYC) process. This typically involves collecting information such as their name, address and date of birth, then verifying this information against official documentation such as a New Zealand driver’s license.
Loading the authority
The authorisation is created automatically by your customer’s bank’s direct debit system when the first direct debit is received from you.
Retaining your authority
You’ll need to provide proof of your entitlement to debit if challenged for up to seven years after the most recent direct debit on your customer’s bank account. If you can’t provide this proof, you risk having to return all funds collected from that acceptor under that authority.
Setting up the authority online or over the phone
If the direct debit authority is set up online or over the phone, you must provide confirmation details of the authority (including the direct debit terms and conditions) to your customer in writing within five business days.
How to provide confirmation
Confirmation details must be sent in writing by:
- Post
- Courier.
Confirmation details may not be sent by text message (SMS).
Your online direct debit authority webpage must be approved by Westpac. The following is intended as a guide – your RM or TSM will let you know if any specific requirements relating to your business need to be included.
As a minimum, you must capture and record:
- Your customer’s address for receiving the confirmation details (physical, PO box or email)
- Bank name, account name and account number that will be debited
- Confirmation your customer agrees the authority is subject to:
- The terms and conditions relating to their bank account, and
- The terms and conditions that relate to the authority, including the additional clause for disputes relating to paperless authorities
- If a person is acting for the customer, confirmation:
- Of the person’s name if it is different to the account name, and
- The person has authority to operate the bank account alone (more than one account holder is not required to jointly authorise debits from the account).
- Confirmation you will send written details of the authority to the address provided no later than five business days after setting up the authority.
Your phone authority script must be approved by Westpac. This script template is intended as a guide – your RM or TSM will let you know if any specific requirements relating to your business need to be included.
Script template for confirming direct debit authority over the phone
Thank you for agreeing to pay by direct debit. To save you time we can set up a direct debit authority for you now over the phone. Please note this call is recorded as a record of setting up this authority.
Are you happy to set up a direct debit authority without signing a paper form?
Yes: Proceed
No: Send the customer an approved direct debit authority form
By setting up this authority you are authorising your bank to debit your account with amounts of direct debits from [your business name] in accordance with the authority and terms and conditions relating to your bank account.
Please provide the following bank account details:
- Name of your bank
- Name on your bank account. (In some instances, the person calling to provide the details may not be the name on the bank account – for example, if it’s a trust account. You may want to take additional steps to verify the person providing the details.)
- Your bank account number.
Let me check the details you gave me are correct.
Confirm the bank account details provided in steps 1, 2 and 3.
Can you confirm you have sole signing authority and don’t need more than one person to sign for debits from this account?
Yes: Proceed
No: Send the customer an approved direct debit authority form.
Thank you. Your first <weekly/fortnightly/monthly> payment of <dollar amount> will be direct debited from this account on <date>.
We will send you details of this authority within five business days by post or email. How would you like us to send this to you?
Email address:
PO box address:
Physical address:
If you need to change or cancel this direct debit authority, please call us on <phone number>.
To avoid disputes, we recommend your terms and conditions relating to the underlying financial contract are kept separate to the direct debit authority.
What to include in your confirmation letter or email
- Date (must be within five business days of your customer setting up the paperless authority)
- Name of your business
- Your authorisation code
- Name of bank account (as provided by your customer)
- Bank account number (as provided by your customer)
- Address (as provided by your customer)
- Confirmation your customer authorises their bank to debit their account in accordance with the authority
- Confirmation your customer agrees the authority is subject to terms and conditions that relate to their bank account
- Specific direct debit terms and conditions that relate to the authority
- Instructions on how to change or cancel the authority
- Contact details including a phone number
Example of a confirmation letter or email
<Name of your business>
<Your authorisation code>
<Customer address>
<Date>
Dear [name of person who set up authority]
Please find enclosed details of the authority you set up with us on [date] that authorises your bank to accept directs debits to your account.
This authority is subject to terms and conditions that relate to your bank account and the specific direct debit terms and conditions listed below.
<Bank account name>
<Bank account number>
<Specific conditions relating to notices and disputes>
Direct debit terms and conditions
You may ask your bank to reverse a direct debit up to 120 calendar days after the debit if:
- You don’t receive a written notice of the amount and date of each direct debit from the initiator, or
- You receive a written notice but the amount or the date of debiting is different from the amount or the date specified on the notice.
You may ask your bank to reverse a direct debit, up to nine months after the date the initiator sent the first direct debit under the authority, if you are not reasonably satisfied that the authority authorised your bank to debit your account with the amount of the direct debit.
The initiator is required to give you a written notice of the amount and date of each direct debit, no less than ten calendar days before the date of the debit.
For weekly/fortnightly variable payments, the initiator is required to give you a written notice of the amount and date of each direct debit no less than two business days before the date of the debit.
For notice no later than the date of the debit, the initiator may only send a direct debit if you have asked the initiator to send it and agreed the amount of the direct debit. The initiator is required to give you a written notice of the amount and date of each direct debit, no less than the date of the debit.
The initiator is required to give a written notice of the amount and date of each direct debit in a series of direct debits no less than ten calendar days before the date of the first direct debit in the series. The notice is to include the dates of the debits and the amount of each direct debit.
If the bank dishonours a direct debit but the initiator sends the direct debit again within five business days of the dishonour, the initiator is not required to give you a second notice of the amount and date of the direct debit.
If the initiator proposes to change an amount or date of a direct debit specified in the notice, the initiator is required to give you notice no less than 30 calendar days before the change.
Please call us on <insert your phone number> if you have questions or would like to cancel this authority. If you cancel this authority, you will also need to advise your bank, either verbally or in writing.
Kind regards,
<Name>
<Title>
The exception to the paperless initiator process is if your customer has dual signing rules on their account (for example a joint account for personal customers, or a business account with dual signing authority). In this case, you must also keep on file a paper authority form that is designed according to industry standards.
Designing a direct debit authority form
The layout and content of the authority form are governed by industry rules. You can download and use our templates or design your own. Whether you design your own form or use one of our templates, you must follow these rules:
- Include your branding, address and other information about your business in the ‘Header’ area only.
- Don’t make any changes to the required layout of the form, including the placement or order of the fields that your customer (the acceptor) must fill in.
- Don’t remove or make any changes to the terms and conditions as set out in the template.
- Enter your authorisation code in the ‘authorisation code’ field.
- Once completed, your authority form must be emailed to Westpac in a Word compatible document or PDF format for approval before it can be used.
Which template should I use?
When you apply for your direct debit facility, you’ll be approved for one of the following notice periods. (The standard notice period is ten days.) This refers to the amount of notice you need to give your customers before you debit their account. Your authority form terms and conditions must include the notice period you are approved for by Westpac.
|
Notice period |
Type of payment |
Frequency |
Example |
|
Two business days
|
Variable payment |
Weekly/fortnightly |
Business-to-business (B2B) payment
|
|
10 calendar days
|
Variable payment |
Monthly/annual |
Power/phone bills |
|
10 calendar days before the date of the first direct debit in the series.
|
Regular payment |
Scheduled |
Insurance premiums or memberships/subscription payments |
|
Same day |
Variable payment |
No later than the date of the direct debit |
Specifically requested by the customer |
You can find more information in the ‘Providing notice to your customer’ section of this guide.
Authority form templates
- Use the form with the notice period you are approved for by Westpac.
- Download the form, then open with Adobe Acrobat Reader to enter your company details in the editable fields.
- If you’d like to upload your company logo, make sure the file is in a PNG format and sized to 860 x 460 pixels.
Two business days authority form template (PDF)
10 calendar days (standard) authority form template (PDF)
10 calendar days (scheduled) authority form template (PDF)
Same day authority form template (PDF)
How much notice do I need to give before debiting my customer’s bank account?
You must provide your customer with notification of the amount that will be debited. When you apply for your direct debit facility, you’ll be approved for one of the following notice periods.
Weekly/fortnightly direct debits: Two business days’ notice
This notice is used for weekly or fortnightly direct debits that are regular in frequency and variable in amount – for example, weekly deliveries of goods from a wholesaler to a retailer.
- Send the notice in writing using the method agreed by your customer (for example – mail, email or SMS).
- Make sure your customer has received it no less than two business days and no more than two calendar months before the date of the debit.
- Include the steps your customer can take if they dispute the direct debit.
Monthly/annual direct debits: Ten calendar days’ notice
This is the standard notice period. It’s used for monthly or annual direct debits that are regular in frequency and variable in amount – for example, utility bills.
- Send the notice in writing using the method agreed by your customer (for example, mail, email or SMS).
- Make sure your customer has received it no less than ten calendar days and no more than two calendar months before the date of the debit.
- Include the steps your customer can take if they dispute the direct debit.
Scheduled direct debits: Ten calendar days before the date of the first direct debit in the series
This notice is used for instalment payments where a contractual arrangement exists between you and your customer – for example, insurance or hire purchase payments. The interval between direct debits must be regular and no more than 12 months. If you propose to change an amount or date of a direct debit specified in the notice, you must give your customer no less than 30 calendar days’ notice.
- Send the notice in writing using the method agreed by your customer (for example, mail, email or SMS).
- Make sure your customer has received it no less than ten calendar days and no more than two calendar months before the first debit.
- Include the following:
- The date of the first debit
- The frequency of direct debit payments
- The amount of each direct debit or, if the amount varies, a schedule specifying each amount and date
- Include the steps your customer can take if they dispute the direct debit.
Same-day notice: No later than the date of the direct debit
- This notice period is used when a customer has requested a direct debit on a particular day.
- Send the notice in writing using the method agreed by your customer (for example, mail, email or SMS).
- Make sure your customer has received it no later than the date of the direct debit.
How to debit your customer’s bank account
- Send a direct debit request to your customer’s bank account by submitting a payment file to Westpac. Your payment file must be generated from your finance system or your online banking platform – Business Online (BOL) or Corporate Online (COL).
- Direct debits or batches of direct debits will be created by your accounting, financial management or other system in the correct file format. This is usually as a fixed length or ‘comma separated values’ (csv) file. Check the product documentation for your accounting or financial management system to determine what steps are needed to create direct debit batches in the necessary file format.
- This file will then be imported by Business Online or Corporate Online for validation, authorisation and processing.
- Include your unique authorisation code in the transaction record. Your customer’s bank will use this code when processing the direct debit to confirm that a valid authority exists.
- The payment is settled to your bank account on the due date with your specified reference data.
- If the direct debit instruction is challenged by your customer, you must be able to produce a copy of the original direct debit to the customer’s bank within five business days.
Where to get help
Contact our helpdesk if you need help importing payment batches into Business Online or Corporate Online.
Corporate Online
Call 0800 423 424, weekdays 8.30am to 5.30pm
Visit Corporate Online Banking
Business Online
Call 04 499 0410, weekdays 8:30am to 5:30pm
Visit Business Online
When will the direct debit be processed?
Direct debit payments are processed 365 days a year, including weekends and public holidays. Your customer must have available funds in their account by close of processing on the due date, otherwise the debit will be dishonoured. This is known as ‘funds dishonour’.
What is a direct debit dishonour?
If we send a direct debit and your customer’s bank decides not to process it (for example, if there are insufficient funds in the account) it will be dishonoured. Your customer’s bank will return the request with the reason why it is dishonoured.
There are two categories of direct debit dishonours:
- Technical dishonours
- Funds dishonours
Technical dishonours
Technical dishonours can happen if:
- Your authorisation code or number is not recognised as valid – for example if your customer’s bank has not updated their register with your authorisation code.
- Your customer’s bank has not yet loaded the authority for the account that needs to be debited.
- The authority can’t be loaded because the account does not support direct debits (for example, certain savings accounts).
- There was a valid authority, but it’s been cancelled by your customer.
- Your customer’s account has been closed or suspended.
In most cases technical dishonours are returned you on the same business day as the original debit transaction.
Funds dishonours
Funds dishonours can happen if:
- Your customer doesn’t have sufficient funds in their account (including any available overdraft) to cover the direct debit.
- Your customer has stopped or revoked a direct debit payment but not cancelled the authority.
In most cases funds dishonours will be returned to you on the same business day as the original direct debit was due to be processed.
Dishonour answers
Your customer’s bank will communicate the reason why a direct debit transaction is unpaid or returned, by entering one of the following dishonour answers in the ‘particulars’ field of that record. This will overwrite any ‘particulars’ value you provided when you sent the original direct debit file.
|
Code |
Answer |
|
01 |
Unauthorised |
|
02 |
No account |
|
03 |
Insufficient funds (refer to debtor) |
|
04 |
Stopped (payment suspended) |
|
05 |
Cancelled (authority closed) |
|
06 |
Account closed |
|
07 |
Transferred |
|
08 |
Limit exceeded |
Retry after a dishonour
If your customer’s bank dishonours a direct debit with the answer ‘insufficient funds’, you may send one additional direct debit for the same amount within five business days of the original transaction, without giving notice.
What’s the timeframe for a direct debit dishonour?
Technical and funds dishonours must be processed no later than the next calendar day. If your customer disputes your right to debit their account or claims you did not provide enough notice to debit their account, they have 120 days to challenge the direct debit. If you can’t show evidence that you have authority to debit your customer’s account or that you provided your customer with the required notice, you’ll need to return the money you debited from their account.
What’s sufficient evidence?
- Signed paper direct debit authority or
- Proof that you sent confirmation to your customer with the terms and conditions relating to your authority or
- Proof that the required notice of direct debit was provided to the customer.
What happens if an authority is suspended?
If the authority has been suspended by the customer’s bank (for example, if fraud is suspected) direct debits will be dishonoured under the ‘unauthorised’ code. If the authority is resumed, direct debits will resume processing as usual.
Who is responsible for resolving a dispute?
Transaction complies with the authority
If the direct debit transaction complies with the authority and the dispute is about the payment (for example, the customer disputes the amount of money that has been debited from their account), you’ll need to resolve this with your customer.
Transaction doesn’t comply/invalid authority
If the transaction does not comply with the authority (for example, you haven’t provided your customer with the required notice before debiting their account) or if a valid authority does not exist, you may be liable to Westpac or the customer’s bank for the transaction.
Fraud or authority invalid or missing
Your customer’s bank may recover the disputed amount if they believe the authority is fraudulent, forged, or the result of an error, or the person who signed the authority did not have the authority to do so.
Amount of debit different from amount notified
Your customer’s bank may be able to recover the disputed amount directly from your account up to nine months after the date of the direct debit, if the amount debited was different to the amount notified, or not debited in accordance with the terms and conditions of the authority. Your customer may also be able to claim unauthorised direct debits back from you at any time.
A reversal of a direct debit that has been disputed does not affect the underlying obligation between you and your customer. This means your customer may be responsible for money owed to your business even if they decide to dispute the direct debit.
How to help reduce fraud
Have a refund policy in place to make sure payments are only credited to the account that paid the direct debit if a dispute happens.
Keeping records
You must keep evidence of the direct debit authority received from your customers, and the details confirmed with your customers, for at least seven years after the date of the final direct debit transaction sent under the authority. Beyond that period, we recommend that you securely store a record of direct debit authorities and other details confirmed with your customers under the same policy you use for your customer agreements, in case of future disputes from customers about payments.
You may also choose to keep records that prove your compliance with the terms of the authority. This may mean you keep direct debit documents for a certain period after your customer relationship ends, depending on your internal policy.
Change of bank or bank account that is debited
If your customer changes the bank account they use to pay you by direct debit, either with the same bank or another bank, they can provide you with the new bank account so you can get a new authority or ask their new bank to use the ‘switching’ process.
How the switching process works
‘Switching’ is an interbank process managed by Payments NZ rules and procedures that allows you to update your customer’s bank account without gaining a new authority.
If your customer chooses to use the switching process, their new bank will provide you with a ‘direct debit initiator transfer advice’ that contains the following instruction:
“Your customer has changed the account the customer uses to pay you direct debits and has authorised us to ask you to change the account details you use for direct debit transactions against your customer’s account effective from [insert effective date] as follows:
– [Acceptor’s name]
– [Old account number]
– [New account number]
– [Reference details to identify acceptor].”
You can request a copy of the switching bank request form signed by your customer if you need to save this instruction for your records.
Change to your business or change of ownership
You’ll need to let us know if:
- You want to make changes to the ownership of your authorisation code or stop direct debiting. We’ll provide you with instructions on what to do next.
- You intend to change the legal name but not the ownership or nature of business. We’ll need to update the Payments NZ register with your new details.
As a paperless initiator, you don’t have to send a paper authority form to your customer’s bank for loading when you first set up a direct debit authority, but if you want to re-instate a direct debit authority after a customer has cancelled it you will need to follow the same process as a standard initiator.
How to reinstate a direct debit authority
Provide a completed and signed authority form to your customer’s bank to be registered or loaded:
- In person
- By post or courier
- By email (if the customer’s bank specifies an email address in the below PNZ register)
In person
- You, as the initiator, can deliver the authority to your customer’s bank in person. It’s recommended you keep a copy for your records.
Post/courier
- Post or courier the authority to the address on the below table.
- Wait 10 business days after sending the form to your customer’s bank so that the bank has time to receive and load the authority.
- If you want confirmation your customer’s bank has received and loaded an authority, you’ll need to send a pre-paid self-addressed envelope with the authority.
- Email a copy of the signed authority to your customer’s bank using the email address on the below table.
- If delivering the authority by email you must:
- Make sure only one authority is attached to each email as a PDF document
- Write ‘Direct debit authority for loading’ in the subject line of the email
- Keep the original signed authority for 120 calendar days after the date of the first transaction and, if requested, provide the original to your customer’s bank within this period. You may wish to retain the authority form, or a copy of it, for a longer period in line with your standard retention policy.
- Keep the copy of the signed authority for seven years after the last transaction sent under that authority and, if requested, provide it to Westpac or your customer’s bank within this period.
Payments NZ (PNZ) register of addresses for completed authorities.
|
Bank |
Postal address for paper authority forms
|
Email address for scanned authority forms |
|
ANZ Bank Ltd
|
Transaction services Maintenance Team PO Box 146 WELLINGTON 6140 |
|
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ASB Bank Ltd
|
Direct Debit Administration Officer National Support Centre PO Box 35 AUCKLAND 1140 |
PaymentandCustSuppAPDD@asb.co.nz
|
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Bank of China (New Zealand) Ltd |
Financial Operations Department Level 17 205 Queens Street AUCKLAND 1010 |
|
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Bank of New Zealand (BNZ)
|
AP and DD Team Private Bag 39 806 Wellington Mail Centre LOWER HUTT 5045 |
|
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China Construction Bank |
Operations Department PO Box 305 Shortland Street AUCKLAND 1140 |
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Citibank N.A. |
GCMS Operations PO Box 3429 AUCKLAND 1140 |
newzealand.operations@citi.com
|
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The Hong Kong and Shanghai Banking Corporation Ltd |
Payment Services Department PO Box 5947 Wellesley Street AUCKLAND 1141 |
|
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Industrial and Commercial Bank of China (New Zealand) Ltd |
Settlements Manager PO Box 106 656 AUCKLAND 1143 |
No email allowed – postal address only |
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Kiwibank Ltd |
Customer Operations Private Bag 39 888 Wellington Mail Centre LOWER HUTT 5045 |
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TSB Bank Ltd |
TSB Bank Ltd PO Box 240 NEW PLYMOUTH 4340 |
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Westpac New Zealand Ltd |
Account Maintenance Team Account Services Support Unit PO Box 203 CHRISTCHURCH 8140 |
These addresses are correct as at 18 May 2023 and are subject to change. Get in touch if you’d like to confirm any of the details.
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Things you should know.
Westpac’s General Terms and Conditions and terms for the direct debit initiator service apply. Fees and charges, eligibility and credit criteria apply. See the Business Transaction and Service Fees Brochure for details.
This guide is provided by Westpac to support our customers with the direct debit initiator service, but it does not cover all obligations that may apply to your business. Westpac does not warrant the accuracy, adequacy or completeness of this guide for your business.