BPAY was set up 10 years ago to provide customers with a convenient and secure way to pay their bills and to create a more efficient collection service for billers and financial institutions.

This regular ?Inside BPAY? section has been created to ensure that businesses understand just how efficient the service can be. Every quarter, we will highlight one aspect of the Scheme - its functionality, technicality and capability - and its biller benefits. Our inaugural article will focus on the topic of check digits.

What is a check digit?
A check digit is a digit at the end of the Customer Reference Number (CRN) that is used to ensure that the Customer Reference Number is entered correctly by the customer paying a bill via BPAY.

How is a check digit assigned?
The check digit is determined by using a calculation on the reference number to produce a number that is added to the end of the CRN.

What are the benefits?

1. When a customer pays a bill by EFT or credit card, the biller must use whatever reference number accompanies the payment to try to reconcile the payment against their Debtors Ledger to determine which customers have paid and that the correct amount was paid.

2. If the biller cannot determine who has paid which bill, then the payment cannot be applied to a customer account. This means that the biller must then keep the unallocated funds in a suspense account until the customer who made the payment can be identified. This can impact cash flow, particularly when hundreds of thousands of dollars are in a suspense account that the biller cannot utilise.

3. With BPAY, the check digit is one mechanism that ensures that the CRN is entered correctly every single time a payment is made. Therefore, the process of checking payments can be fully automated, which means the biller takes less time to allocate payments and avoids the issues of unallocated payments in suspense accounts.

4. BPAY delivers cleared funds overnight, improving cash flow. With BPAY payments there are no chargebacks, so payers can not use the payment as a dispute mechanism. Payments received are cleared funds to the Biller, as the payments are irrevocable.