Do you operate a gym, supply software as a service or run another subscription-based business? If so, you will likely have an automatic direct debit system. If not, you are probably looking to set one up. When setting up an automatic direct debit system, it is a legal requirement that you obtain your customers’ consent to take funds out of their accounts automatically. This involves providing customers with a direct debit request (DDR) form and a DDR service agreement. The Australian Payments Clearing Association (APCA) has specific rules about what your DDR form and DDR service agreement need to contain.
This article will explain both the DDR form and the DDR service agreement. It will also discuss how to ensure you comply with the APCA rules.
DDR Form
The DDR form is designed to collect details about the bank account your customer would like debited. It also sets out when and how much will be deducted from the customer’s bank account.
The APCA rules say that you must ask for several things, including the customer’s:
- bank account name;
- account number; and
- BSB number.
What the DDR Must Contain
Asking for the branch’s address or suburb is optional. However, your DDR form must contain:
- your bank account details, so customers know which bank account their funds will go; and
- your user identification number — the unique number that any business using automatic direct debits must obtain from the APCA.
If the customer is providing their consent in writing, the customer must sign and date the document.
You must also set out on either the DDR form or in the DDR service agreement:
- the amount of the payment you will deduct from the customer’s account;
- how often you will deduct the payment from the customer’s account; and
- on what date you will deduct the payment from the customer’s account.
If you set out this information on the DDR form, then the DDR service agreement must tell the customer to refer to the DDR form to confirm these details.
Continue reading this article below the formDDR Service Agreement
The DDR service agreement is the document you must provide your customers alongside the DDR form. It sets out the terms and conditions under which you will debit a customer’s bank account.
There are specific statements you must include in your DDR service agreement. The information you have to provide in your DDR service agreement includes:
- that your customers can cancel, amend or dispute a direct debit payment at any time;
- that the customer must have adequate funds in their nominated bank account to ensure the payment can process;
- what happens if the payment date falls on a non-business day; and
- how you will treat the customer’s personal information.

If you are a company director, complying with directors’ duties are core to adhering to corporate governance laws.
This guide will help you understand the directors’ duties that apply to you within the Australian corporate law framework.
Key Takeaways
A DDR form and service agreement are necessary to automatically deduct payments from your customers’ bank accounts. In summary, the documents will:
- help you retrieve your customers’ information;
- obtain their consent; and
- set out warnings that customers must have sufficient funds in their account to permit your fees to be withdrawn.
Following the APCA’s guidelines is a legal requirement for organising direct debits with your customers.
If you need help setting up a DDR system, our experienced business lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.
Frequently Asked Questions
If you want to set up an automatic direct debit system to take payments from your customers for your business, you will require, at a minimum, a direct debit request (DDR) form and a DDR service agreement. A DDR form, which sets out the authorisation provided by your customer for you to automatically deduct amounts from their nominated card or bank account, is different to a DDR service agreement, which sets out the rights and obligations of the parties when the parties are undertaking a direct debit arrangement.
Additionally, we recommend having a privacy policy in place to govern and disclose to your customers how you handle any personal information you may be collecting from your customers in the course of providing your services.
A direct debit request form is a legal document that sets out the consent from your customer for you to collect automatic direct debit payments from their nominated card or bank account. A DDR form should include clear authorisation from the customer for you to deduct amounts from their account, your bank details, your user identification number and the details of the customer’s nominated payment method. If your DDR form does not include when and how much will be collected from the client through the arrangement, your DDR form should refer to your DDR service agreement, which should contain these terms.
We appreciate your feedback – your submission has been successfully received.