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What is Direct Debit?

Rob Keating
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Last editedMay 20232 min read

Direct Debit is an automated payment method that allows merchants to pull payment directly from their customers' bank accounts.

Direct Debit is a type of payment that exists in geographies around the world, in which payments are pulled from a customer's bank account to the receiving merchant. This occurs as a bank to bank payment, which doesn't use cards and is instead facilitated by a bank payments scheme (in the US, the scheme used is the ACH Network).

Find out more about what ACH payments are more generally here.

In other areas of the world, Direct Debit payments exist too, but will be facilitated by different payment schemes, such as Bacs in the UK and Becs in Australia.

What's the significance of Direct Debit?

First, it's important to establish that Direct Debit is known by several synonyms, including: Bank Debit, ACH Debit, ACH Pull or pull-ACH.

It's an important payment method because it provides an alternative to the card networks, is better suited to certain payment types, it's more cost effective, and offers benefits like easy automation for businesses.

Key features of Direct Debit

The system has two key features, from which almost everything else follows:

  1. Direct Debit is pull based - once given a mandate by their customer, it is the merchant who initiates Direct Debit payments. The customer doesn't need to lift a finger.

  2. Direct Debit payments are bank-to-bank - there are no card networks involved in the Direct Debit scheme. All communications happen directly between the banks.

How to collect Direct Debit payments with GoCardless


Create your free GoCardless account, access your user-friendly payments dashboard & connect your accounting software (if you use one).


Easily set up & schedule Direct Debit payments via payment pages on your website checkout or secure payment links.


From now on you'll get paid on time, every time, as GoCardless automatically collects payment on the scheduled date. Simple.

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Direct Debit is pull based

With Direct Debit, it is the merchant who initiates payment collection. This "pull-based" nature has considerable benefits:

  • Cash flow. Direct Debit puts the merchant in control of when they are paid and can reduce the number of late payments they receive.

  • Automation. The entire collection process can be automated, reducing admin for both the merchant and their customer.

  • Flexibility. Unlike standing orders, Direct Debit allows the payment amount and frequency to be varied, keeping the merchant in control.

The pull-based nature of Direct Debit also necessitates strong customer protection.

End the stress of being paid late by automating your payment collection!

Getting paid on time with GoCardless is simple, affordable and easy to set-up in just a few clicks.

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Direct Debit payments are bank-to-bank

Direct Debit operates through the ACH rather than through the card networks. This has significant benefits when taking payments on an ongoing basis:

  • Low cost. Since Direct Debit payments are not routed through expensive card networks, they are extremely cheap.

  • High retention. Churn due to card expiry is completely eliminated, so Direct Debit relationships last longer than ongoing card payments.

  • Anyone can pay. Anyone with a bank account can pay by Direct Debit.

Using bank-to-bank infrastructure, rather than the card networks, also has a disadvantage: Direct Debit payments are not instant.

Direct Debit payments through GoCardless

GoCardless is an online bank payments specialist that manages the entire collection process on your behalf.

Merchants can either collect and manage their payments using our easy-to-use online dashboard, via one of our hundreds of software integrations with popular providers such as Xero, or by integrating with our REST API for a custom solution.

GoCardless makes it easy to accept Direct Debit. Automate payment collection. Reduce manual admin. Get paid on time, every time.

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Over 85,000 businesses use GoCardless to get paid on time. Learn more about how you can improve payment processing at your business today.

NextUse cases for Direct Debit
Interested in automating the way you get paid? GoCardless can help
Interested in automating the way you get paid? GoCardless can help

Interested in automating the way you get paid? GoCardless can help

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