in Business

Is there room to improve Direct Debit?

GoCardless Direct Debit Guarantee

Direct Debit use in the UK grew by 4.9% in 2016 - but how can we make it even more popular?

Direct Debit has been growing fast over the last few years. Today in the UK, over 90% of personal current account holders and around 40,000 organisations use it - and it’s the most popular way for UK consumers to pay their bills. Recent figures show that 9 out of 10 adults have at least one active Direct Debit and pay around 73% of their household bills this way.

Bacs, (short for Bacs Payment Schemes Limited), the organisation behind Direct Debit, processed over 6 billion transactions in 2015 to a value of £4.6 trillion. This figure included an impressive 3.9 billion Direct Debit payments, an increase of 239 million on the previous year.

But despite the popularity of Direct Debit, there remain areas for improvement. Bacs has conducted research into the current state of Direct Debit, to ensure the product remained ‘relevant and fit for purpose’.

Here at GoCardless, part of our job is educate businesses about the benefits of Direct Debit, so we were keen to understand these insights from Bacs. In this post, we explore some of the issues unearthed in the research, and examine ways to address them.

The consumer view

For consumers, the Direct Debit Guarantee is a key feature giving them confidence and trust in the system. The Guarantee (also known as the ‘Direct Debit Indemnity’) is a method of customer protection built into the Direct Debit scheme. It protects customers against payments made in error or fraudulently, making Direct Debit the UK’s safest payment method.

According to the Bacs research, more than half of consumers surveyed (57%) said they were aware of the Guarantee. But younger and less financially secure individuals are less likely to be aware of it. Over a quarter of consumers said they didn’t know how long the Guarantee was valid for, with a third believing it to be valid for a year or less.

It’s important to convey that the Guarantee is unlimited, as this helps consumers feel more secure in using Direct Debit. Educating consumers about the Direct Debit Guarantee could be the key to building their confidence and encouraging them to pay by Direct Debit.

What’s more, users with less knowledge of Direct Debit are more likely to think money can be taken from their account at any time, without warning. This audience said they would like to be notified when Direct Debit payments are set to leave their account, but didn’t realise that Direct Debit providers are already obliged to inform them of this.

The business view

As far as SMEs are concerned, the research found that only 3% pay their bills by Direct Debit (compared to 73% of consumers). Possible reasons may include the traditional struggle for B2B suppliers to offer Direct Debit as a payment method (due to challenging access requirements from the banks), along with consumers’ tendency to be ahead of the curve in cloud adoption, plus the late payments culture in British business.

For SMEs, perceptions about the Direct Debit chargeback rate have been largely inaccurate, with figures showing consumers charging back less than one in every 4000 Direct Debit payments. What’s more, it’s fraudulent to falsely charge back payments. Awareness of this is important for setting small business owners’ minds at ease and making them more likely to use Direct Debit to take payments from their customers.

Improving Direct Debit for all

For many people, Direct Debit is a trusted payment method due to the Guarantee.

But this research has uncovered opportunities to improve understanding: both among consumers so they’re more willing to pay by Direct Debit, and among businesses so they are more comfortable in offering it. In turn, this points to an opportunity for Direct Debit growth in both B2C and B2B, leading to improved cash flow for everyone.

Having brought Direct Debit into the digital age, GoCardless is well-placed to deliver further improvements, as well as helping to educate consumers about the many benefits of taking payments by Direct Debit.

Learn more about how GoCardless is helping companies improve Direct Debit.

We're helping companies do Direct Debit better
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Why is GoCardless launching the Open Banking Hub?

GoCardless Open Banking PSD2

Open banking is one of the most important emerging trends in the world of finance today.

It involves using technology to transform the financial services industry, levelling the playing field and giving consumers more control of their data.

This all stems from the introduction of PSD2...a term that may already sound familiar. PSD2 is short for the ‘Payment Services Directive 2’ and was designed as a pan-EU project, involving a range of countries within the bloc.

Together, PSD2 and open banking are gearing up to revolutionise the payments industry. The new directive is likely to affect everything from how we pay online, to the information we see when making a payment.

As part of this change, banks will be required to offer open APIs to allow third party developers to build apps around various elements of the financial services industry.

Fintech companies and other innovators will have the chance to leverage data in ways that benefit the customer.

But in reality, Open Banking is about more than APIs…

We believe technology has the power to unify and simplify finance.

That’s why GoCardless is launching an Open Banking Hub. Our goal with this platform is to disseminate insightful and informative content to help our audiences better understand the many benefits of open banking, for both their firms and their customers.

The GoCardless Open Banking Hub will also be useful for keeping track of how the open banking trend will impact us all. For busy senior executives in the financial services industry, projects such as implementing PSD2 requirements can become just another sprawling management concern.

Success of those projects hinges on how well you serve your customer. Everything published on the Open Banking Hub will be written with that philosophy firmly in mind.

The Hub will aim to provide some all-important context for understanding open banking. To do that, we’ve created a comprehensive timeline of the PSD2 project.

What’s more, the open banking revolution is full of acronyms and complex terms. To help you navigate this new world with ease, we’ve created one of the first open banking glossaries, which we’ll continue to update as new terms emerge.

Our Hub will feature a wide range of content, including interviews with key stakeholders — banks, investors, industries around the world, along with summaries, news and reviews of key events and announcements, plus deep dives into the various technology that’s driving the open banking revolution.

In addition, the Hub will offer a range of expert insights into how the latest developments in regulation and compliance are being shaped, and how organisations can use them to gain a competitive edge.

We’ll be talking to everyone from investors and entrepreneurs to industry organisations, in a bid to uncover how open banking will impact the financial services industry and beyond.

Find out more about open banking and PSD2
Check out the Open Banking Hub
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Maximising business freedom - Takeaways from Zuora Subscribed 2017

Last week, some of the GoCardless team headed to San Francisco to attend the Zuora Subscribed 2017 event.

Freedom was the overarching theme for Subscribed this year. Discussions revolved around the move from a world where customers bought products to a world where subscriptions to services offer maximum freedom for the end-customer.

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I’m Avani Painter, and I joined GoCardless around 11 months ago as part of the Inbound Sales team. I then moved over to the Customer Success team, where I am today. My role here involves working with our biggest clients, making sure we’re managing our existing relationships effectively and finding growth opportunities.

Before joining GoCardless I worked in finance, while working on my own startup idea. When I was looking for my next career move, GoCardless seemed like the perfect combination of the two!

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On a global post-Brexit stage, what’s next for London tech?

In this turbulent era of market uncertainty, political changes and new economic powerhouses, what might London’s future place in the global tech scene look like? And how do those who are funding London’s hottest tech innovators view the capital’s role in changing times? Where better to seek answers to these big questions than at an event full of angel investors, VCs and world-leading entrepreneurs? We attended the Tech London Advocates Investor Showcase this week at Here East hoping to learn more.

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Accountex 2017: How accountants must meet the new digital reality

For those looking to transform and revitalise their accountancy practice, Accountex 2017 was the place to be this May. Held at the ExCel centre in London’s Docklands, the cream of the UK’s accounting world came together to discuss everything from the latest tech to the future of the industry.

What did you miss? In short, one very simple buzzword featured heavily across all the presentations, panels and exhibitor stands at this year’s event...

...and that word was ‘Digital’.

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in Business

Five ways to skyrocket your Direct Debit take up rates

Our merchants often ask us: “What level of Direct Debit uptake can I expect from my customers?”

The answer is, well, it depends!

Here we outline five simple ways to increase the take up of Direct Debit among your customers. Following these best practices can mean a huge difference in take up rates - anything between 10% and 100% increase!

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in Business, People

Springtime productivity tips from GoCardless

With spring now upon us, it’s time to refresh your working day and think about how to squeeze more value from your time. Working smart is something we think about a lot at GoCardless, so here’s a selection of our favourite tips and productivity hacks. From standing desks to white noise, and clever apps to handwritten lists - we hope you’ll find some useful ideas in here to turbocharge your own workflow.

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A day in the life of developer support at GoCardless

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I’m Nicola Pellatt and I work in the Developer Support team at GoCardless. I support merchants and partners who are building integrations using our API. My team also provides support to the rest of the company on more technical internal issues. I’ve been working here for a year and two months now - so I recently celebrated my first GoCardless birthday (and got a lovely bottle of champagne)!

What does my typical day look like?

Unlike Sam in Design and Ahmed in Legal, my typical day doesn’t start with exercise! I get into the office at around 9am and the first thing I do is grab a bagel and a cup of tea. It's always the same combination as I’m a creature of habit, but I do like to buck the office trend of coffee. That also means I don’t have to queue for the busy coffee machine!

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in Business

‘Golden era’ for UK tech: GoCardless attends Tech Nation 2017

Optimism was certainly in the air today at the Tech Nation event, where the UK’s brightest technology minds gathered to discuss the newly released report from Tech City.

Despite Brexit looming on the horizon, the UK tech scene is well-equipped to make the most of the country’s departure from the EU. As the digital capital of Europe, the UK secured £6.8 billion in tech investment in 2016, over 50% more than any other European country. That's likely to stand the country in good stead as its EU divorce gets underway.

Although the lion’s share of investment is still London-centric, the rest of the UK is starting to grab its share of the pie too. The shape of digital tech investment is changing and regional players are now accounting for two-thirds of UK tech investment; that’s £4.6 billion.

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