Last editedApr 20232 min read
Direct Debit - also known as ACH Debit or bank debit - helps telecoms and hosting companies reduce failed and late payments, and gives them the flexibility to take varying usage fees, and upgrade subscriptions.
Telecoms and hosting companies, from start-ups to established providers, can cut their costs by taking Direct Debit payments online. They usually choose Direct Debit for three reasons:
Enable customers to upgrade their subscription easily.
Reduce failed payments and churn.
Reduce late payments.
Benefit 1 - Enable customers to upgrade their subscription easily
Your customers may want to upgrade or downgrade their subscription. Equally, their usage and charges may vary each month.
If they pay by standing order or bank transfer, the customer will need to change the amount of their payment themselves. With Direct Debit, your customers don’t need to do anything - you have full control over how much you take from them, and when.
Adam Howard-Dobson, Services Director at VoIP provider Zen Systems, switched to Direct Debit with GoCardless looking for:
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.
Benefit 2 - Reduce failed payments and churn
The easier you make your payment process for your customers, the more likely they are to keep paying for your service.
Using Direct Debit helps make your payment process as easy as possible. It allows customers to just set and forget about their payments, instead of having to remember to pay you each month.
Many telecoms or hosting companies use cards to take payments. About 5-10% of these fail each month due to cards expiring or being cancelled. This is a bad experience for your customers, creates unnecessary work for them having to update their details, and - if they forget - may result in their subscription lapsing, and you losing them, with only a 26.3% re-subscribing.
By contrast, Bank Debit payments use a customer’s bank details, which rarely expire or change, as a result, GoCardless merchants enjoy a payment success rate of 97.5%.
Benefit 3 - Reduce late payments
Direct Debit puts you in control of when you’re paid. Once you have authorization from your customer, you can collect payments directly from their bank account whenever they’re due.
This means you can make sure all your customers pay on time without awkward conversations about stopping their service.
Before turning to GoCardless, Zen Systems struggled with customers paying up to 3 months late. Adam explained, “When you start getting large volumes of customers, there is an associated cost of sale with those services. With customers paying so late, it was hard to take control of the business. Now that we use GoCardless, everyone pays on time.”
How to get started with Direct Debit
You can get access to Direct Debit through a bank, a bureau, or GoCardless. If you would like to find out more about any of these options, you may find our 60 second guide to Direct Debit providers helpful.
GoCardless is a specialist Direct Debit provider. With GoCardless, you can automate your whole payment process and manage everything online. GoCardless offers:
Quick and easy sign up - You can sign up instantly and for free.
Easy and efficient management - You can collect recurring and one-off payments automatically, or at the click of a button. We manage everything else for you. We are also integrated with many of the most popular accounting packages to enable easy invoicing and payment reconciliation.
Simple, low pricing - See our pricing options here.
Online dashboard and REST API - GoCardless offers a simple online dashboard and REST API, which allow you to integrate GoCardless with your website and CRM.