Reading time: 3 minutes

Do you operate a gym, supply software as a service or run another subscription-based business? If so, you are likely to have an automatic direct debit system in place. 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 account 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 you can ensure you are complying 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 a number of things, including the customer’s:

  • bank account name;
  • account number; and
  • BSB number.

Asking for the branch’s address or suburb is optional. However, your DDR form must contain:

  • your bank account details, so customers know into 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.

DDR Service Agreement

The DDR service agreement is the document that you must provide to 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 payment is processed;
  • what happens if payment falls due on a non-business day; and
  • how you will treat any personal information the customer provides to you.

Key Takeaways

Having a DDR form and DDR service agreement is necessary to deduct payments from your customers’ bank accounts automatically. 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 of organising direct debits with your customers. If you need help setting up a DDR system, or advice on your DDR form and DDR service agreement, call LegalVision’s business lawyers on 1300 544 755 or fill out the form on this page.


Redundancies and Restructuring: Understanding Your Employer Obligations

Thursday 7 July | 11:00 - 11:45am

If you plan on making a role redundant, it is crucial that you understand your employer obligations. Our free webinar will explain.
Register Now

How to Sponsor Foreign Workers For Your Tech Business

Wednesday 13 July | 11:00 - 11:45am

Need web3 talent for your tech business? Consider sponsoring workers from overseas. Join our free webinar to learn more.
Register Now

Advertising 101: Social Media, Influencers and the Law

Thursday 21 July | 11:00 - 11:45am

Learn how to promote your business on social media without breaking the law. Register for our free webinar today.
Register Now

Structuring for Certainty in Uncertain Times

Tuesday 26 July | 12:00 - 12:45pm

Learn how to structure to weather storm and ensure you can take advantage of the “green shoots” opportunities arising on the other side of a recession.
Register Now

Playing for the Prize: How to Run Trade Promotions

Thursday 28 July | 11:00 - 11:45am

Running a promotion with a prize? Your business has specific trade promotion obligations. Join our free webinar to learn more.
Register Now

Web3 Essentials: Understanding SAFT Agreements

Tuesday 2 August | 11:00 - 11:45am

Learn how SAFT Agreements can help your Web3 business when raising capital. Register today for our free webinar.
Register Now

Understanding Your Annual Franchise Update Obligations

Wednesday 3 August | 11:00 - 11:45am

Franchisors must meet annual reporting obligations each October. Understand your legal requirements by registering for our free webinar today.
Register Now

Legal Essentials for Product Manufacturers

Thursday 11 August | 11:00 - 11:45am

As a product manufacturer, do you know your legal obligations if there is a product recall? Join our free webinar to learn more.
Register Now

About LegalVision: LegalVision is a commercial law firm that provides businesses with affordable and ongoing legal assistance through our industry-first membership.

By becoming a member, you'll have an experienced legal team ready to answer your questions, draft and review your contracts, and resolve your disputes. All the legal assistance your business needs, for a low monthly fee.

Learn more about our membership

Chloe Sevil
Need Legal Help? Submit an Enquiry

If you would like to get in touch with our team and learn more about how our membership can help your business, fill out the form below.

Our Awards

  • 2020 Innovation Award 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice Award 2020 Employer of Choice Winner – Australasian Lawyer
  • 2020 Financial Times Award 2021 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review
  • 2021 Law Firm of the Year Award 2021 Law Firm of the Year - Australasian Law Awards
  • 2022 Law Firm of the Year Winner 2022 Law Firm of the Year - Australasian Law Awards