Direct Debits are a financial transaction where a company or person takes funds from the others bank account. From a customer point of view it allows the organisation to collect money at scheduled times and amounts from your bank account that have been pre-agreed.
In this guide we'll detail all there is to know about Direct Debits so you can be informed as a business and customer. Click the links to jump to the section:
A Direct Debit is a simple and easy way of making regular and occasional payments to a business.
Before a bank will allow the transaction to take place, the payer must authorise the bank that they are allowed to draw the funds from their bank account.
Once agreements are in place, money is deducted automatically. If any changes to frequency, date of collection or Direct Debit amount the organisation has to inform the customer first before it can be processed.
The most common transactions people use Direct Debits are:
Utility bills - People use Direct Debit to pay things like their electricity bills or council tax or even their mobile phone bill. If you're a utility company or phone service provider you can easily streamline your customers payments
Gym memberships - Fixed subscriptions or memberships are the easiest way for your customers to make their recurring payments to services like sports clubs and magazine subscriptions
....any many more.
Want to set up a Direct Debit for your business? Get in touch and one of our handy team are on hand to talk you through your questions.
You'll need to get set up with Bacs and join the Direct Debit scheme in order to start to accept Direct Debits from your customers.
Get in touch with the bank handling your business transactions to talk about Direct Debits. There are a few administrative aspects to go over before you can join the scheme.
To make your payments simple, find a payment specialist (like us!) or a Bacs approved bureau.
Depending on what type of business you are and who you choose to go with you may need to get a Service User Number (SUN) from your bank. Our guide goes into more detail about how to obtain a service user number.
To be able to actually collect the money from your customers you'll need to get a Direct Debit mandate, also known as a Direct Debit Instruction (DDI)
This is an integral part of the Direct Debit Scheme which gives permission from the customer for you the business to collect payments from their bank.
Customers need to sign these DDIs, we offer online or paper forms, as well as telephone approval to make things easier for you.
When setting up payment solutions for your business, it's important to make sure you understand what rules are in place to make sure you don't get stung down the line.
All customers are protected by a Direct Debit Guarantee, this is when their bank that gives your customers an immediate refund should a payment be taken from their account that was not agreed. It's up to you as a business to ensure that any changes to Direct Debits are communicated to your customers or you could find yourself with late or failed payments and reconciliation nightmares. There is an appeals process you can follow should you believe a payment should have been met.
You are required to give your customers an advance notice which states the amount and date of each payment in advance.
Direct Debits and Recurring Payments can suite a whole suite of businesses including; Subscription payments, Utility companies, Rental organisations, Phone companies, Gyms and sports clubs, Software companies, Retailers & merchants, Game companies...And much more.
Want to know more? Speak to our friendly team who can talk you through our payments solutions. We offer direct debits with simple, affordable pricing, with no set-up fee and transaction fees as low as 4p.
Find out how recurring payments can help grow your business...
Learn how SMEs use Direct Debits and how to set up a Direct Debit for your customers.
Understand the number of rules you need to abide by in the UK when it comes to Direct Debits.