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Ice cream to fintech: 50 years of Direct Debit

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Last editedApr 20233 min read

What have Direct Debit and ice cream got in common?

That may sound like the beginning of a bad joke, but, believe it or not, the modern payment system used almost four billion times a year in the UK was born out of the need to collect money from thousands of ice cream retailers. And, when the idea was first developed back in 1964, payment methods were extremely limited.

Those looking to make and receive payments in 1960s Britain faced a vanilla option. They could use cash or write a cheque, much as one would have done in the Victorian era, or set up a standing order via the bank. The latter was a rigid and inflexible practice that also took time to establish. Then, Alastair Hanton, an executive at consumer goods giant Unilever, came up with a solution. Why not ask the debtor for permission to take regular payments of whatever size directly from their bank account?

Inspired by Unilever’s need to get payment from those ice cream vendors, Hanton devised an ‘automatic debit transfer’ process to enable payment of differing amounts at variable times with the minimum of fuss. The entity that was owed cash would be authorised to directly access the debtor’s account to retrieve the appropriate sum. A simple idea, really, but one that shocked the banking establishment of the day. The seeds had been sown for Direct Debit, the modern payment system.

Bankers back then were as resistant to change as they are today. But, despite strong resistance from what Hanton characterised as Britain’s ‘banking cartel’ of the period, Unilever went ahead with its plan to automate cash collection. The group persuaded both the bankers and the businesses with which it worked of the merit of allowing recurring direct payments. This revolutionary method took four years to become fully functional, but by 1970 the renamed Direct Debit system had been adopted, and was soon gaining in popularity beyond the confines of Unilever.

Hanton, now a sprightly 90-year-old still working to make the world a better place through cycle campaigning, knew his payments idea wasn’t altogether novel. In truth, the Germans got there first. A similar automated process had been in operation in Germany since the 1950s, but the German Giro account system didn’t seem a natural fit for Britain at the time. The UK model of Direct Debit was in keeping with the mood of the era, seeming modern, streamlined and efficient, and it clearly appealed to the population.

Direct Debit took off rapidly, then grew steadily over the next few decades. By the 1990s, the volume of transactions had reached more than a billion per year. As we were ringing in the new millennium, two billion Direct Debit payments were being processed annually. Today, almost 50 years after the service first came into use, nine out of ten British adults makes a regular payment via Direct Debit, and three out of four household bills are paid in this way.

It’s hard to imagine day-to-day life without this simple, practical, and ubiquitous method of transferring money from A to B. That’s probably why Direct Debit is the payment method British adults are most comfortable using, in particular for increasingly popular subscription payments, according to recent GoCardless research.

How to collect Direct Debit payments with GoCardless


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


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Direct Debit is approaching its half century, but that doesn’t mean it’s out-of-date. Far from it, it’s still progressing and adapting to the times. The fundamental principle of the automated debit process remains the same as that imagined by Alastair Hanton all those years ago – fast, flexible, regular payments made and received with minimal hassle.

But methods have evolved since then. Thirty years ago, payment files by magnetic tape were discontinued and replaced by new digital processes. Recent developments have been particularly fast-moving, with technology changing the way people bank, and interact with their finances. The fintech revolution has given far broader access to areas and services that were previously closed off to most people and businesses. Payment methods are no exception.

This democratising of financial services has been seen in the arrival of payment pioneers, such as GoCardless and Stripe. These innovative enterprises are opening up payment processing to SMEs, individuals, and organisations that previously would have been deemed too small by the banks to use such systems.

New entrants are drawing back the veil on the industry, improving transparency around charging, enhancing the customer experience, and speeding up the entire procedure. It’s now possible to set up payment processing instantly and affordably, with everything up and running in minutes rather than weeks or months, as was the case previously.

It’s all a long way from ice cream. But, just as Alastair Hanton revolutionised payments in Britain by inventing the Direct Debit model, so companies like ours are taking that original desire for a better, faster, fairer system, and adapting it for the 21st century. And, for businesses and individuals alike, that’s no joke.

Interested in collecting payments via Direct Debit?

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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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