Direct Submitter vs Indirect Submitter

In this helpful guide, we share the different ways an organisation can collect payments by Direct Debit and the mechanisms which make them work

Direct Debit is a recurring payment mechanism facilitated by Bacs in the UK. Companies that wish to take advantage of the Direct Debit scheme rely on software and systems in order to create and send information about their payments to Bacs and receive reports about their payments from Bacs.

What is Bacstel-IP?




Bacstel-IP is the system which allows Service Users to access Bacs securely. It allows online submission of Bacs files and the retrieval of Bacs reports, as well as transparent management of the submission, tracking and viewing of payer files. Software used to submit files to Bacs is costly and complex, so many organisations prefer to partner with organisations that can help to simplify the process, such as SmartDebit.

To determine which category an organisation fits into they either have to develop their own software which is capable of submitting files of payers and their payments to Bacs in a predefined format (known as Bacs 18), or partner with an organisation that can manage this process on their behalf.

What is the Bacs 18 file format?




Bacs 18 (also known as BACS Standard 18) is the required file format used to send payment instructions to Bacs in order for them to be processed successfully. ISO 20022 is an international messaging standard used by most of the world’s payment infrastructure, but Bacs use a different file format currently. This added complexity means organisations considering creating submission mechanisms have to ensure that their solutions are future-proofed and facilitate the ability to understand and translate file formats.

Each method has its own merits and challenges, depending on the needs and capabilities of each organisation. There are two classifications of merchants processing Direct Debit.

What is an Indirect Submitter?




An indirect submitter is the term used for an organisation that uses a third-party software provider to package and submit their payer files to Bacs.

SmartDebit provide a solution for Indirect Submitters under our Bureau Service. We simply link to your Service User Number to be able to process on your behalf and pick up all Bacs reports, removing the need to access the Bacstel-IP service.



Being an indirect submitter means you benefit from:




  • Reduced costs – no need to maintain and upgrade expensive Bacs software
  • Improved efficiency – reducing hands-on administration internally
  • Increased speed – expedited set-up means you can go to market more quickly
  • Reduced risk – compliance and contingency are covered
  • Increased revenue – reduced rates of payment error
  • Automation – remove time-consuming manual tasks associated with fixing unsuccessful payments

How does it work?

use an iframe to integrate with our online Direct Debit system

Payer signs up for regular recurring payment by Direct Debit

Third party system translates payment details to Bacs 18

Payer is lodged with the payer’s bank

A payment instruction is sent to the payer’s bank via Bacs on a regular basis depending on the agreed payment schedule signed by the payer

Bacs report on any errors (these can be amendments, cancellations or failed payments)

Service User attempts to resolve problems on Bacs reports (if appropriate)

Payments continue until cancelled or an end date has been added.

Direct Submitter




A direct submitter is the classification of Service User who can originate payment instructions using their own internal systems to package and submit payment files directly to Bacs.

Being a direct submitter can carry a number of disadvantages, including:




  • Technical debt – maintenance of complex systems and development resource to ensure any changes (such as ISO 20022) are compatible with solutions
  • Key man dependency – reliance on key staff to understand and complete complex processes, reducing organisational efficiency and agility
  • Increased risk – dedicated compliance resource to navigate changes to the Bacs rules and guidelines and thorough contingency planning
  • Increased costs – software and resource rules required to action Bacs report reason codes

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