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How Long Does a Direct Debit Refund Take?

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Last editedApr 20232 min read

More and more individuals and businesses are using Direct Debit (DD) to pay for recurring, or one-off payments. Setting up a Direct Debit not only eliminates the need to use a physical card for transactions but works out less costly. Just as importantly, Direct Debit also offers an extra layer of security.

However, there will inevitably be rare instances where there’s an error with a DD, or a payment doesn’t match the terms laid out in the Direct Debit agreement. In this case payments will be refunded. No-one wants to be left out of pocket, so you may be wondering just how long does a Direct Debit refund take?

How long do Direct Debit refunds take?

As with all automatic payments processing, errors occasionally creep in, for example via a glitch in the system or, rarely, due to fraudulent activity. In this case customers will require a Direct Debit refund. All customers are covered by the Direct Debit guarantee, which entitles them to a full, immediate refund. When customers ask how long for a direct debit refund to show up in their account, the answer is: immediately.

Customers can request a refund for any Direct Debit payment, provided their payment provider agrees their claim is valid. To request a refund customers must notify their bank to inform them they believe there’s been an error.

The Direct Debit guarantee is offered by all banks, building societies and other payment providers that accept instructions to set up Direct Debits for customers. Under the terms of the guarantee, Direct Debits can also be cancelled at any time, by contacting the bank or building society in advance.

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Direct Debit refund: how long is the process?

If a bank or other payment provider is satisfied an error has occurred, the bank will issue the payer with a full refund immediately. The bank then notifies the merchant and raises an indemnity claim. The amount refunded to a customer is then reclaimed by the bank, from the merchant, automatically in 14 days’ time.

Does a Direct Debit refund differ between merchants and banks?

As demand for Direct Debit increases, more and more banks and providers are offering this automated payment option.

This necessitates signing up to the Direct Debit guarantee. This minimises the risk associated with any payments that are made in error. Any breaches of the guarantee or your rights as a customer are taken seriously. So serious in fact, that in many cases, when a customer makes a claim they can often receive a full refund within two hours. This makes Direct Debit one of the safest payment methods in the UK.  

How long does it take to refund a Direct Debit if you cancel the payment?

If you agree with a bank or payment provider that they can take payments via Direct Debit, from your credit or debit card at a future date, you can cancel the payment before it is taken. This applies to:

  • One-off payments, for example, to pay back a loan.

  • Regular payments, for example, to pay for gym membership or a magazine subscription.

You can stop a future payment at any time up to the close of business on the day before the payment is due. To withdraw your consent you need to tell your bank or building society you don’t want the payment to be made, and this can be done via phone, email or letter. Your payment provider doesn’t require you to ask the company you’re making payments to first.

If your provider allows a payment to be taken when you’ve asked them not to, you're entitled to your money back. And as when asking “how long to refund a Direct Debit made in error?” The answer is the same: immediately – along with any interest or charges applied to your account due to the payment going through.

Hopefully this post has helped to answer the commonly asked question “how long for a Direct Debit refund?” and given you some pointers as to your rights under the Direct Debit guarantee.

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