Support
Direct Debit

Steps to take if a Direct Debit payment fails

One of the many benefits of Direct Debit is that payment failure tends to be lower than card payments. In fact for Access PaySuite customers, failed payments typically sit below 0.2%, whereas credit card decline rates can be as high as 15%.

However, when a Direct Debit payment fails, it's essential to know what to do and how to resolve it. Whether a failed Direct Debit occurs due to insufficient funds, a closed account, or another issue, understanding the next steps will help avoid disruptions.

This article explains why a Direct Debit may fail, how to deal with a failed Direct Debit, and the potential consequences, including whether a Direct Debit will be retried.

FAQs Business Advice

Posted 28/09/2022

Why Might a Direct Debit Payment Fail?

What happens if my customer's Direct Debits fails? As a service user you’ll receive a notification via an ARUDD (Automated Return of Unpaid Direct Debit) report, citing a reason for the failure. The most common reasons are insufficient funds or where a payer has cancelled their instruction. Other reasons include:

  • The account has been closed, transferred or is not recognised
  • There is a dispute from the payer, such as insufficient funds or due date
  • The payer has deceased
  • There is no Direct Debit Instruction in place.

 

How to Deal with a Failed Direct Debit

When a Direct Debit collection fails, you can try and collect the payment again. This is known as re-presenting. However, before trying to re-present, it’s important to understand why the failure happened in the first place, using the reason code in your ARUDD report as a starting point. A re-presentation should only then be made if the collection is likely to be successful. Otherwise, it wastes time and money. If you do decide to re-present, here’s the criteria you have to meet:

  • The re-presentation is within 30 days of the original collection date
  • The Direct Debit has not been cancelled since your last collection
  • It is not past the end date of the payer’s Direct Debit collection schedule
  • The code returned in the ARUDD report is not ‘No Instruction’ as this implies no instruction is held at the paying Payment Service Provider. A dormant Direct Debit can be resubmitted, but this needs to be identified to your bureau and resubmitted to Bacs.
  • It is identified as a transaction code 18.


Thankfully, the success rates of collecting failed Direct Debit payments is high and over double that from a credit card. In fact, Chargebee showed that an average of 25% of payments were recovered through dunning.

 

How will I know if a missed Direct Debit will be retried?

If your customers’ Direct Debit fails, you may ask: will it be retried? It will really depend on how you collect Direct Debits. If you use a bureau, they may re-present these for you for a fee, some like Access PaySuite re-present with no charge. 

 

Need to Reverse a Direct Debit?

If your Direct Debit payment failed and you need to reverse an incorrect charge, check out our guide on how to reverse a Direct Debit payment for step-by-step instructions. 

Thankfully, the success rates of collecting failed Direct Debit payments is high and over double that from a credit card. In fact, Chargebee showed that an average of 25% of payments were recovered through dunning .

 

Need Help Managing Direct Debit Payments?

Dealing with Direct Debit failures can be frustrating, but you don’t have to handle it alone. Whether you’re looking to reduce failed payments, automate collections, or improve cash flow, our expert solutions can help.
Get in touch with our team today to see how we can streamline your payment processes! 

Contact us