Direct Debit: from low tech to digital

2016 was another record breaking year for Direct Debit in the UK. Find out how flexible Direct Debit solutions have opened up the system to businesses of all sizes


We’re in the midst of a revolution in payments, which is already changing how consumers pay for goods and services. In 2015, cashless payments overtook cash-based payments. The number of Direct Debit payments is also growing at an annual rate of 5.8%. These shifts are all part of a rapid change in consumer behaviour driven by the desire to make managing finances simpler, faster and more flexible.

The stats back this up. In 2015 Bacs, the company behind Direct Debit in the UK, processed over six billion payments. That’s a staggering 6.7 million transactions every hour.

What’s driving this move away from cash and other traditional payment methods? Is it purely a result of consumers choosing more convenient options? Or has the emergence of flexible, cost-effective Direct Debit solutions opened up the payment market to businesses of all sizes?

Old Direct Debit came with restrictions

Direct Debit is nothing new – in fact, the UK Bacs system has been around since 1968. But back then in the low-tech age, Direct Debit still had some restrictions that kept it from becoming a universally adopted payment method.

In the past, Direct Debit was the preserve of larger, corporate businesses. For SMEs, cheques and standing orders remained the most common payment options well into the early 21st century.

Before the internet age levelled the playing field Direct Debit was expensive to run, costing tens of thousands of pounds every year. Banks commonly asked for large bonds (often £100k or more) to open up Direct Debit access to SMEs, putting Direct Debit out of reach for many.

Also, running and administrating Direct Debit through banks was complex and time-consuming, with full-time employees needed to set up, collect and manage payments. Setting up Direct Debit was a slow and cumbersome process. Businesses normally needed to wait at least six months to gain approval to the scheme.

But new Direct Debit is for the digital age

At GoCardless, we’ve brought Direct Debit into the digital age. Our system uses the latest technology to streamline and automate online Direct Debit payments. We’ve changed Direct Debit beyond recognition. The process of running an automated payments system is now faster, more efficient and far more cost-effective. We’re now the UK’s leading Direct Debit provider processing over £1 billion in transactions each year. More than 20,000 merchants use our product to improve their payment processes.

GoCardless has transformed Direct Debit from an expensive, complicated, pre-digital system to an affordable, automated, post-digital one. Here are some of the key advantages:

  • Simple migration - quick and easy to move your existing customers to GoCardless
  • Transparent fees - No set up costs or large bonds, pay only for successful transactions
  • Reduces admin - Manage customers and payments online, along with automatic reconciliation
  • Take immediate action with real-time alerts of cancelled mandates, chargebacks and failed payments
  • Blend GoCardless seamlessly into your existing software with our pre-built integrations
  • Build your own custom integrations with our powerful API

Innovative and flexible payment options

GoCardless’ 21st century Direct Debit isn’t just about saving time. Our solution delivers an incredibly flexible way to offer new, innovative payment options – options that bring real benefit and choice to your end customers.

By using Direct Debit via GoCardless, merchants can now increase their options. Large purchases can be paid off in instalments, or payment for regular services can be taken from customers automatically. Our flexible system allows you to take payments on the dates and frequencies that best suit your customers.

  • Spread the cost for customers – by integrating GoCardless into their online payment options, Thomas Cook now allows customers to pay for their dream holiday in smaller, monthly instalments.
  • Automate payment collection – GoCardless allows merchants to take payment by Direct Debit as soon as an invoice is sent out, automating cash collection and reducing the average payment period.
  • Scope for expansion – Selling into the EU offers plenty of scope for future expansion. GoCardless allows businesses to accept payments across the EU: in pounds sterling through Bacs Direct Debit, in euros through SEPA Direct Debit, and in Swedish kronor through Bg Autogiro. This opens up a wide range of potential new markets for your business.

A simple way to automate payments

Direct Debit delivers a fast, inexpensive and painless way to automate recurring payments. Many of your customers have grown up online and are increasingly proactive (and selective) about how they manage their finances. And that means there’s a golden opportunity to engage with these customers, meet their payment option expectations and keep them happy.

At GoCardless, we’re constantly improving our product. Our cloud-based Direct Debit solution helps you create a payment collection process that’s quick, cost-effective and integrates fully with your overall workflow.

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