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Phantom pains: Why changing Direct Debit provider doesn't have to be painful

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Last editedOct 2020

There’s a big difference between recognising the need for change and actually making that change. The decision to go ahead with a change or not will inevitably always come back to your members. How will making a change affect them?

One problem with this is that not making an important change can be equally damaging in the long run. If the status quo begins to upset your members, member experience and member retention will suffer.

This probably sounds a bit doom and gloom. Thankfully, that’s not the case. Or at least not always. One area where you can make a positive change that will benefit both you and your members in the future is moving to an automated online Direct Debit solution for your payment needs

Members are now demanding more flexible subscription options that can be set up and managed online. For example, in a recent GoCardless survey of 500 members from various organisations, we found that 85% of respondents said it was important to be able to manage payments online.

But there are a lot of misconceptions and worries that switching to an online provider will be painful, but it certainly doesn’t have to be.

This guide walks you through eight of the most common misconceptions around making the switch, and shows you how stress-free it can be in reality - especially if you make a couple of key decisions along the way:

##1. “Our business name will no longer appear on bank statements if we move to a third-party provider”

Whether or not your organisation’s name appears on a member’s bank statement is down to the Service User Number (SUN). The SUN is a unique identifier for organisations using Direct Debit. It’s a requirement to submit directly to Bacs (the UK’s Direct Debit clearing service). If you handle Direct Debit using your own solution, you will likely have your own SUN, and if you have a third-party solution, they will ‘own’ the SUN.

Most medium-to-large business with significant member numbers will have a sufficient volume of payments to warrant a unique SUN assigned by the new Direct Debit provider, meaning your organisation’s name will still be the only name that appears on bank statements.

If you use either the GoCardless Plus or Pro packages you will be assigned a unique SUN, meaning your business’s name will be the only name shown on the bank statement, presenting no disruption or confusion to the member.

##2. “We’ll lose control of the experience on our payment pages”

As you look to improve member experience and improve your online offering, a member’s (or potential member’s) experience when paying is a huge consideration. This can include both the act of inputting details to complete payment setup and the experience of using any payment pages the member will encounter.

A common cause for concern is the idea of giving up control. What if the new online experience isn’t as straightforward as previous? Will customers abandon the process? Once again, using GoCardless Pro as an example, you can add your own logo and visual branding elements to the payment pages sent to members.

Payment page experience goes well beyond your Direct Debit provider. Make sure your payment page is fully optimised with our helpful guide.

##3. “Going through a Direct Debit will mean a longer wait when taking payments”

With an automated Direct Debit system, the opposite is true. The industry standard wait to receive Direct Debit payments is around 10 days; GoCardless can process payments in just three days. The platform also provides a great deal of flexibility over when to take payments.

##4. “We’ll lose a lot of members because of the switch”

A big part of the process of switching to a new payments provider is migrating all your customers’ Direct Debit mandates to the new provider, allowing them to start collecting payments on your behalf. This is referred to as the bulk change. You can learn more about creating and updating Direct Debit mandates here.

While you do need to notify your members of the switch in writing, at least four weeks prior, they do not need to actively opt-in. You can find a template letter here, or you can notify members as part of exiting communications to minimise disruption.

As far as your members will be concerned, they should experience no other disruption to their subscription. You can continue to take payments during a bulk change. This has proved true in our experience of carrying out the bulk change for numerous business, with very low cancellation rates and a number organisations losing no members whatsoever when switching to GoCardless.

Helen Parkinson, Finance Lead at 3-1-5 Health Club explains her experience with the switch using GoCardless: “We were a little nervous about the switch, but it went smoothly. The support we got from GoCardless made it so much easier. To know we have people like GoCardless behind us is reassuring.”

##5. “The bulk change process is technical and will take months to complete”

By moving to a new Direct Debit provider, you’re no longer alone in managing all the technical aspects of switching Direct Debit provider, as a good provider will guide you through every step of the bulk change process.

GoCardless, for example, has an entire team dedicated to helping new organisations get up and running on the service. This includes providing a timeline of actions needed and readily-available support for each step.

In terms of time, while a bulk change is not instant, with some careful planning it’s possible to have the entire process completed in 4-6 weeks. The process of carrying out a change of SUN ownership, which forms the main aspect of the bulk change, is outlined below:

  • 4+ weeks before

    Inform new and old SUN owners of the change. The sponsor banks for each SUN must then agree to the change.

  • 3 weeks before

    Complete and submit two forms to the sponsor bank of the new SUN owner:

    1. The Bulk Change Deed. transfers liability for indemnity claims to the new SUN owner
    2. The Notification of Change Form. informs the new SUN owner's sponsor bank of the size and date of the change

  • 0-3 weeks before

    Notify payers of the change in writing using bank-approved wording. An example letter to payers is available here.

  • 2 working days before

    Submit final payments under old SUN.

  • Change date

    Process the change. Bulk changes are processed by cancelling the original mandates at the same time as creating new ones.

  • 3 working days after

    Payments can be submitted using the new SUN from this day onwards.

##6. “Connecting our CRM to a Direct Debit provider is another headache for us to worry about.”

There are multiple ways to integrate your new Direct Debit provider to your website, but most businesses opt for a connection to a specialised membership or billing platform, whether that’s the one they already use or a new CRM that can be set up alongside your new Direct Debit solution. It also reduces the fragmentation of having data stored in various systems.

While it may seem like adding a Direct Debit provider in addition to a CRM will only compound the technical demands, both of these types of services place a great emphasis on the merchant and end-user experience. Therefore, any existing integration that connects the two together will have been built, tested and approved by both parties.

GoCardless, for example, can seamlessly connect to a range of partner integrations, all of whom we work closely with to ensure the experience runs as smoothly as possible.

##7. “Switching Direct Debit provider will make my members’ money vulnerable.”

It’s obviously advisable to carry out due diligence on any new Direct Debit provider you consider working with, as they should recognise the fundamental importance of security, especially with new GDPR compliance rules to add to the mix.

You can ask your new provider where your members’ money will be stored, and ask for other accreditations that will prove any claims made about security and compliance.

GoCardless, for example, is authorised by the Financial Conduct Authority to act as an Authorised Payment Institution. All client-server communication is 256-bit encrypted and GoCardless is ISO 27001 accredited.

While security should always be a paramount concern for any Direct Debit provider, your members will always be protected by the Direct Debit guarantee, giving them (and you) peace of mind that they are entitled to a full and immediate refund should something go wrong.

##8. “I’ll lose control over data security but still be ultimately responsible”

While you do, of course, have a responsibility for the data you collect and store on your members, if you use a third-party payment provider, they certainly share the responsibility with you.

Many payment providers, according to new GDPR rules are now ‘data controllers’ meaning they have an even greater responsibility to the member than before.

Data controllers, such as GoCardless, will assume responsibility for misuse of data or a breach and are directly liable to data protection authorities in relation to all obligations under GDPR.

GoCardless stores all the sensitive member data, instead of your business needing to worry about it. This is one less thing to worry about when taking Direct Debit payments.

##Is GoCardless the right solution for my business?

The best way to discover whether a provider is right for your business is to ask how it will deal with all of the above statements. It will become clear very quickly whether an automated Direct Debit solution can ensure it will all be taken care of.

Through constant product development and conversations with hundreds of organisations, GoCardless has made the process of switching Direct Debit providers more straightforward and less time intensive.

If you want to learn more about the process of switching to GoCardless, fill in this form and one of your Direct debit experts will be in touch.

Over 85,000 businesses use GoCardless to get paid on time. Learn more about how you can improve payment processing at your business today.

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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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