It’s been a British institution since the 1960s, but in the last half century, Direct Debit has gone from clunky and paper-based, to sleek, slick and simple.
In this post, we’ll clear up some common misconceptions around Direct Debit, so you’re up to date on the UK’s most popular method for collecting recurring payments.
Myth 1: Gaining access to Direct Debit is difficult
If you want to start processing payments by Direct Debit today, you can choose direct or indirect access. In the past, access to Direct Debit was only available directly, through your bank. The process was, and in some cases remains, slow. It also requires significant effort and expense for the person applying – in setup and ongoing management.
For very large businesses with high transaction volumes, who can meet the revenue criteria of banks and don’t mind hiring people to manage the process (and sourcing their own software), direct access may still be the preferred route, since it enables them to negotiate the lowest transaction fees.
The other way to access Direct Debit is ‘indirectly’ via a third party provider like GoCardless. These providers manage the Direct Debit process with the bank on your behalf. They are an attractive option for many businesses; they can provide an online plug-in-and-go service, significantly reducing setup time and cost and ongoing management and admin. And choosing a third party provider doesn’t necessarily mean high transaction costs (see myth 5).
One of the questions we often get asked is whether or not we process credit or debit card payments.
GoCardless specialises in bank to bank payments using Direct Debit schemes around the world, meaning you can’t use us to take payments via card.
This FAQ Friday, we hear from GoCardless’ Director of Business Operations and Strategy, Pranav, as he talks us through the three mains reasons why this is and why we believe this is better for our customers.
Finding a great match isn’t easy. You have to have a good connection. It helps if your values align. You should bring out the best in each other. You need to see a future together. And ultimately, when you know, you know.
When GoCardless launched its first integration with small business cloud accounting platform Xero a few years ago, we knew it was the start of something big. We spent time making a great connection (with a seamless user experience) and we shared the same belief in beautiful business, in streamlining admin and giving small businesses more time back to focus on growth.
And when you put us together, we made more: our users were paid on time, while avoiding manual reconciliation and reducing accounting errors. They could manage payments and billing in once place, saving hours of time on admin.
Payment failure rates with Direct Debit are low compared to other payment methods (typically <3% with Direct Debit compared to 5-15% with cards).
Though Direct Debit is one of the most reliable payment methods, transactions can still fail. This week on FAQ Friday, Product Marketing Manager, Ross, explains what GoCardless transaction data tells us about payment failures. He reveals the two most common reasons for Direct Debit payment failures and what you can do about them.
It seems not so long ago that we revealed our launch of Australian Direct Debit with accounting software partner Xero and already we have more good news to share. You can now collect Direct Debit payments from customers in New Zealand through GoCardless!
Have you ever stopped to think about all the processes that go into your existing DIY Direct Debit solution? How many hours of admin are needed every week to carry out and reconcile all your payments? What happens when a payment is missed by a member? And how often do you have a member on the phone complaining about a problem with their payment?
The infographic below looks at 7 of the most important aspects of your payment processing and how a DIY solution matches up to an online provider.
GoCardless (company registration number 07495895) is authorised by the Financial Conduct Authority under the Payment Services Regulations 2009, registration number 597190, for the provision of payment services.