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What is an instant direct debit and how does it work in the UK?

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The GoCardless content team comprises a group of subject-matter experts in multiple fields from across GoCardless. The authors and reviewers work in the sales, marketing, legal, and finance departments. All have in-depth knowledge and experience in various aspects of payment scheme technology and the operating rules applicable to each. The team holds expertise in the well-established payment schemes such as UK Direct Debit, the European SEPA scheme, and the US ACH scheme, as well as in schemes operating in Scandinavia, Australia, and New Zealand. See full bio

Last editedMar 20232 min read

Instant direct debit is also known as Instant Bank Pay, Instant Pay, Instant Payments and Paylinks. It is a way for merchants to charge customers’ bank accounts and get real-time confirmation of the payment. It is therefore becoming increasingly popular as a low-cost, simple and quick way to charge customers for one-off purchases.

What is instant direct debit?

Instant direct debit is not actually a direct debit at all. It’s a way of enabling customers to make bank transfers easily and with full security. This means that instant direct debit is actually a push transaction. In other words, the customer is responsible for pushing the funds to you (in response to your request).

Actual direct debit transactions are pull transactions. In other words, the merchant requests payment from the payer’s bank account. The request is automatically granted unless the customer actively denies it.

Because direct debits are pull transactions, they have to be submitted in advance of the requested charge date. This gives the customer time to refuse the payment if they wish. The notice period varies by scheme. In the UK it is three working days.

Benefits of instant direct debit (compared to traditional direct debit)

Confirmation of payment is immediate (as opposed to three working days later)
Funds are usually transferred by the next working day after the charge date (as opposed to two working days later).
No need to capture customers’ details in advance of payment (as opposed to needing to set up a mandate).

Drawbacks of instant direct debit (compared to traditional direct debit)

Instant direct debit is powered by Open Banking. This is not yet supported by all UK banks. With that said, it is already supported by all large banks and by the majority of smaller ones.

How instant direct debits work in the UK

There are four ways you can create instant direct debits in the UK. Two of these ways use the GoCardless dashboard. The other ways are to use GoCardless partner software that supports it or to use the GoCardless API. The option to use the GoCardless API is only available to merchants on Pro accounts. The other options are open to all merchants.

How to create instant direct debits using the GoCardless dashboard.

The first way to create instant direct debits using the GoCardless dashboard is from the Payments tab. At the top right of the screen, you will see a Paylinks button. Click on this and enter the details of the amount you wish to collect. Confirm whether or not you wish to be able to take further payments from this customer using traditional direct debit.

This approach will create a paylink. You can copy this and send it to your customer (or integrate it into your website). Alternatively, you can email it to customers from the GoCardless dashboard. You can charge all customers this way, regardless of whether or not you have an existing customer record for them.

The second way to create instant direct debits using the GoCardless dashboard is to go to an existing customer record. At the top right of the screen, you will see a Create button. Click on this and choose the option Instant Payment. Enter the details of the amount you wish to charge.

This will create an individual paylink you can send to your customer. Again, you can either copy the link or email the customer from the GoCardless dashboard.

How the customer makes an instant direct debit

The customer clicks on the link (or scans a QR code). GoCardless connects them to their bank and they authorise the payment. Once the payment is made the customer receives an instant confirmation.

What happens after a customer makes an instant direct debit?

The merchant receives an immediate notification of payment. If the payment is made before 11 AM on a working day, the funds can usually be paid out that day. If it is made after 11 AM on a working day, the funds can usually be paid out the next working day.

We can help

GoCardless is a global payments solution that helps you automate payment collection, cutting down on the amount of financial admin your small business needs to deal with. Find out how GoCardless can help you with one-off or recurring payments.