Direct Debit: not for instant, high risk or high value transactions
While you can use Direct Debit to collect nearly anything - one-off, ad-hoc and recurring payments (fixed and variable) - there are three things you should never use it for:
Instant payments – Direct Debit payments take 3-5 working days to clear, so they’re not ideal for e-commerce goods that need to be shipped immediately.
One-off payments for high value goods – In practice, less than 0.2% of Direct Debit payments are charged back. However, we still wouldn’t recommend using Direct Debit to collect payments for high value goods like cars where you stand to lose a lot from a fraudulent indemnity claim.
High risk payments – We also wouldn’t recommend using Direct Debit for liquid assets (like currency or loans) or services like gambling as these are more likely to be charged back.
If you're collecting any of these you may want to consider using other payment methods like credit card.
Direct Debit puts you in control while saving you time and money
If you're collecting any other type of payment it's probably worth taking a closer look at Direct Debit. Around 60,000 organisations are already using it to collect payments including utility bills, membership subscriptions, charitable donations and B2B invoicing. Here's three great reasons you should join them:
Direct Debit puts you in control. Once you’re given authorisation by your customer you initiate payments – your customer doesn’t need to do anything. This also means that you can vary the payment amount and frequency whenever you need to.
Direct Debit can save you admin time. The entire Direct Debit payment process can be automated, reducing admin for both you and your customer: Payments will automatically be taken when they’re due without your customer needing to do anything.
Direct Debit is more cost effective than card payments. Using credit or debit cards costs around 2-3% of the transaction amount + a flat fee of 20-30p. In comparison, Direct Debit typically costs much less - GoCardless charges 1% per transaction, capped at £2.
If you'd like to find out more about whether Direct Debit is for you, you might find our Direct Debit for Beginner's Guide helpful.