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Direct Debit in a nutshell: A guide for merchants

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As Global Head of Content Marketing, Chris oversees all of the content requirements for our organic, growth marketing, and demand generation campaigns. This requires a fundamental understanding of the pain points our customers are experiencing and a thorough comprehension of the ways those customers consume and engage with content. A growth marketing expert in the tech space, Chris has worked with complex global businesses such as Google, AWS, Microsoft, SAP, Adobe, Dell and Oracle to grow their most valuable customers, increase revenue and speed up deal cycles. He has also led on customer lifecycle management programs and account-based marketing strategies for BlackRock, EY, Grant Thornton and UBS. ConnectSee full bio

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David and his team manage relationships with banks, scheme providers, and other parties involved in payment transactions in the UK and Scandinavia. David has worked in the finance and payment industry for over 12 years, primarily focusing on the BACs and Faster Payments schemes. He has sat on governance committees and chaired cross-government public sector working groups. David is also a regular attendee at the SIBOS and MoneyLIVE financial conferences. ConnectSee full bio

Last editedJun 20242 min read

Direct Debit is the ultimate way to collect recurring payments

Direct Debit is a popular payment method in the UK, with around 60,000 UK organisations using it to collect bills of all kinds, including utility payments, membership subscriptions, charitable donations and B2B invoicing.

In 2021, Bacs, processed over 4.6 billion Direct Debit payments, an increase of 114 million compared to the previous year (source). As of December 2019, GoCardless processes £19 billion worth of Direct Debit transactions for over 70,000 customers.

Direct Debit is highly versatile

It’s great for:

Recurring bills for variable amounts. Direct Debit is a great way of collecting variable amounts for companies that invoice customers depending on how much they use or buy.
Fixed subscriptions or memberships. Direct Debit is perfect for recurring payments, such as magazine subscriptions or gym memberships, due to its low cost and high retention rates.
Taking payments on account. If you have an ongoing relationship with your customers, Direct Debit is a good option for them to spread costs or pay on account.

How to collect Direct Debit payments with GoCardless

1.

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

2.

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

3.

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

Collect by Direct Debit easily — link your Xero account to GoCardless and set up Direct Debit payments!Learn more about Direct Debit collections

Direct Debit is perfect for regular payments

Collecting payments with Direct Debit has four main benefits:

Direct Debit puts you in control - Late payments affect cash flow and admin time, as you have to spend time and effort chasing them. But Direct Debit lets you collect payments whenever they’re due. For example, Has Bean Coffee reduced its average payment period from 62 to 41 days, by switching to Direct Debit with GoCardless.
Direct Debit can be automated - Once authorised, you can take payments from customer accounts with no further action needed from them. If you’re collecting fixed amounts at regular intervals, GoCardless lets you “set and forget” the payment. All the magic happens automatically.
Direct Debit is cost effective - With Direct Debit, you can avoid costly credit and debit card transactions, which cost around 3% each. GoCardless offers several competitive pricing options.
Direct Debit gives you flexibility - Unlike standing orders, Direct Debit allows you to change payment amount and frequency without customers needing to re-authorise. So you can take variable amounts or increase prices whenever needed, with absolutely no admin hassle. This also gives your customers an easy way to spread the cost of their payments.

Getting paid shouldn't cost you time, money and stress!

That's why GoCardless automates payment collection to make it simple, affordable & hassle-free.

Learn More

Direct Debit can be used for one-off payments too

Although Direct Debit is usually associated with regular and recurring payments, it can also be used for collecting one-off payments. It’s important to remember that Direct Debit is not an instant payment method so shouldn’t be used where immediate transfer of funds is needed, such as for e-commerce.

Direct Debit and GoCardless

GoCardless is the UK’s leading Direct Debit provider, used by over 70,000 organisations ranging from small businesses and sole traders, to large companies such as TripAdvisor and the Guardian. Our system can be set up in seconds and managed online, along with the option to integrate our API with your website and CRM.

We’re also regulated as an Authorised Payment Institution by the Financial Conduct Authority.

Find out more about how to set up Direct Debit for your business, or read in more detail about the facts of taking payments with Direct Debit.