The weakest link in any automated payment process is at the point where payment details are entered manually. Errors occur either as a result of being provided with incorrect information initially or due to errors introduced at the point of data entry. Data entry error rates in data at the point of capture can be anywhere between 2% and 8%.
In addition to the problems associated with data entry errors, the problem of accurately validating bank details is further compounded by the following:
The identification of Account Numbers is not always easy, especially where several numbers appear on a Payer’s bank card. Usually Originators encourage the payer to check the details on their cheque book to confirm which number is the account number. However, most payers are much more likely to have their payment card in their immediate possession and so often give the incorrect account number.
Many Sort Codes and account numbers do not support Direct Debits while others do not support Direct Credits. Since it is impossible to tell this from the numbers themselves, Originators frequently capture inappropriate bank details.
Originators must “transpose” a significant number of account numbers and sort codes from the form in which they are issued to the payer (and therefore on their payment card, statement and cheque book) into a form that will be required by Bacs for processing. The incorrect transposing of account numbers is a major source of errors for Originators.
The data required to validate bank details is constantly changing. Each month new bank and building society branches are opened, some are closed and others are amalgamated. The rules for integrity checking (Modulus Checking) change regularly and occasionally, the transposing rules for a particular institution change.
Although many organisations have implemented systems for checking the accuracy of payment data - usually in-house developed - these tend to rely on limited supplies of data and are not regularly updated.