Is Direct Debit Safe?

Direct debit offers users a simple and convenient way to make regular fixed payments, as well as one-off payments. They’re a great way to pay utility, mobile and subscription services, for example, on a recurring basis, and they give customers peace of mind they won’t miss a payment.

A Direct Debit authorises a payment provider to take payments from your account when they’re due. To set up a Direct Debit you need to fill in a Direct Debit Mandate either in print or online, and once authorised, your provider will take payments from you automatically, when they’re due.

There are many advantages to using Direct Debit, from convenience to cost efficiencies. For example, there’s no need to worry about remembering to pay bills on time, which can help to avoid fines for overdue payments. Some utility companies offer discounts for paying by DD too, so it presents a cost-effective way to pay bills.

But some people worry is Direct Debit safe?

As consumers become more wary of warnings about the security of their data they can become concerned that payment providers will mishandle their money or make payments that aren’t due to them. So how safe is Direct Debit?

In this post we’ll aim to dispel any concerns around potential Direct Debit risks.

How safe is Direct Debit?

Direct debits are covered by the Direct Debit guarantee. This ensures that banks, building societies and all other payment providers will refund, without question, any disputed payments, immediately. All banks and building societies who offer direct debits as an option have to sign up for the Direct Debit guarantee.

When signing up for the Direct Debit guarantee, companies need to undergo a vetting procedure before they’re approved. They are then closely monitored by the banking industry ombudsman.

GoCardless is a vetted and approved payment provider. We not only strictly adhere to the Direct Debit guarantee, but we’re authorised by the Financial Conduct Authority (FCA) and – for even more consumer protection – we’re ISO27001 certified since 2016.  These strict regulatory requirements are in place to keep all our customers extra safe.

The Direct Debit Guarantee

The Direct Debit Guarantee applies to all Direct Debits and involves offering the following safeguards to consumers:

• If there are any changes to a Direct Debit in terms of the frequency, amount or date of the payment, your payment provider must notify you (within 10 days) in advance of the payment being taken from your account.

• If an error is made in the payment of your Direct Debit by your payment provider, you will receive a full refund immediately.

• You may cancel a Direct Debit at any time, by contacting your bank, building society or payment provider.

Direct Debit risks

While Direct Debits are a useful way to pay all kinds of one-off or recurring payments there are some things you shouldn’t use them for. These include one-off payments for high ticket goods, for example cars, where you could lose significantly from fraudulent indemnity claims. Direct Debits should also be avoided as a payment form for high-risk payments, for example, for liquid assets like currency, since these are more likely to be charged back. For these kinds of payments a credit card might be a better option.

To sum up: Is Direct Debit safe? A resounding “yes”

Direct Debit is a secure and straightforward way to make regular, or recurring payments, making it the ideal choice of payment for utility and other types of bills. Thanks to the Direct Debit guarantee, consumers will always be refunded for payments taken in error and be forewarned about any upcoming changes to payments. You can also cancel a Direct Debit whenever you want, leaving you in control of all your payments.

We can help

GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.