You’ve already seen the benefits that Direct Debit can have for your business, but could you be getting more from your Direct Debit solution? New technology has led to improvements in Direct Debit systems which could save you time and money; while increasing competition means providers have to up their game to keep your business.
Ask yourself these 10 questions to find out if your Direct Debit system is really delivering.
1. What’s your payment failure rate? Could it be lower?
At best, payment failures cost time and money to rectify and create bad experiences for customers. At worst, they could lead to needless churn of your customers and impact your member lifetime value, as well as potentially costing you a fortune in additional charges.
What is the current payment failure rate for your gym? Has it reduced since you started using your current provider? Failure rates vary but if yours is greater than 1% you could be getting a bad deal (GoCardless gym customers have an average failure rate of 0.5%).
Asking your current provider about payment failure rates and whether or not failed payments can be retried at no cost will help you to make an informed decision.
2. Are you charged for ‘extras’?
Are you charged extra for failed payments? Adding new customers? Reporting? Cancellations? BACS submissions? Most Direct Debit bureaus will charge you a fixed amount of between 35p to 50p per transaction, with additional charges for these extra services. This can easily double your charges, adding to your monthly running costs. There are no hidden charges with providers like GoCardless - you’re only charged for successful payments.
3. Does your Direct Debit solution integrate with your membership management software?
Can you create better payment experiences though an API or integrate directly with billing, CRM or membership management software like Virtuagym, Glofox, Teamup, ClubRight or ClubManager? Many Direct Debit solutions don’t integrate fully with your existing software. That means more hassle and headaches to get your payment data into your management system.
4. How much time does it take to manage the entire Direct Debit process?
From sending out Direct Debit forms to actually being paid, how long does it take? Days, weeks, or even months? Waiting for mandates to be signed and paperwork to be posted isn’t efficient. You may have to wait weeks before you’re ready to start taking payments. And, in business, time is literally money.
Modern Direct Debit providers will help you do it all online - from creating your own online payment pages to receiving automatic payment status notifications and more.
5. Are you free to collect payments on multiple dates?
Are you constrained to one or two dates each month to submit payments? If yes, can you choose these dates to suit your business and your members? Some providers only offer a restricted number of collection days in the month. That can be extremely limiting, both for you as a business and for your customers.
Flexible payment collection days can help to reduce failure rates. For example, if a customer can pay after they receive their salary each month, you are less likely to have payments that fail due to insufficient funds.
6. Do you get notified automatically if a payment fails?
Does your provider notify you as soon as a payment has failed, with detailed reporting on the nature of the failure? If you’re not informed when payments fail, you can’t react to resolve the issue. Without automatic notifications, you have to rely on lengthy weekly or monthly reports.
7. Are you getting good customer support and is there a dedicated UK support team?
What are the Trustpilot reviews for your current provider? Do you get fed up dealing with email-based support desks, or talking to outsourced customer service teams that can’t answer your Direct Debit queries? Talking on the phone to a dedicated Direct Debit expert can be reassuring. Some providers don’t offer phone support, and others have outsourced their support to a third party – so resolutions can take time.
8. Can you take one off, recurring and variable payments?
Does your provider make it easy to create fixed payment plans and set up the one-off payments you need to collect from customers? Sometimes you’ll need to collect a one-off payment, or want to vary the amounts in a payment plan. Most bureaus will charge you for these bespoke amounts and payments.
9. What is the process for switching to a new provider?
While new rules mean that no provider can stop you from moving to a competitor, some providers have made the process difficult in the past. Before you decide on a new Direct Debit provider, ask how they would support you to move providers should you wish to. Suppliers that are confident in their service are likely to have an open exit process, without exit fees and without delaying the release of your funds or disturbing your customers.
10. Can you charge in both GBP and euros?
Do you have the flexibility to take payment collections not only in GBP but also in euros if you’re trading with customers across Europe? Taking payments in euros means using the Single Euro Payment Area (SEPA), a service that some providers don’t offer and others will charge you an additional fee to use.
GoCardless: transparent pricing, flexible options and efficient integration
We hope the information above will help you make an informed decision about your Direct Debit provider.
At GoCardless, we aim to deliver modern, customer-centric Direct Debit, including:
Transparent pricing – We’re up front about the service you can expect and the lack of any hidden costs in our pricing. By charging you a flat 1% fee, capped at £2, on your transactions, you know exactly what you’ll pay each month, with no extras. For larger businesses, volume based pricing is also available.
Flexible options – We don’t believe in limiting your payment dates, payment amounts or whether you’re trading in the UK or the Eurozone. We give you options, so you can tailor the service to your business needs.
Efficient integration – Our UK support team help you integrate your payment processes directly with your membership management software. So reconciling transactions is a breeze and you’re automatically notified when payments fail – so you’re on top of your numbers.
GoCardless API - At GoCardless, we put a lot of time and energy into making sure our API is top quality. We’re committed to it’s security, quality and maintenance, including features such as the automatic calculation for Direct Debit timings and built in compliance with Direct Debit schemes and a dedicated developer support team. Visit our developer site to find out more.