Do Banks Charge For Collecting Direct Debits?

Since the first Direct Debit took shape in 1964, this payment form has become one of the most popular transaction types in the UK. Over 80% of UK adults have at least one regular Direct Debit payment leaving their account each month, confirming its place as a reliable payment gateway. 

The rates of Direct Debit use in the UK rise annually, with predictions of 5 billion payments by 2032. Multiple factors influence the adoption of Direct Debit, including the fact that it is easy to set up payments, the process is transparent for customers, and businesses have consistent payment flows. 

The question of do banks charge for Direct Debits may be a relevant one for businesses looking into trusted payment options to organise for their customers. Here, we delve into how a Direct Debit solution can better support businesses.  

Contents

• What is the process of Direct Debit payment?
• Do banks charge for collecting Direct Debits?
• Is Direct Debit flexible?
• How Interbacs makes Direct Debit easy for you. 
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What is the process of Direct Debit payment?

Direct Debit is an extremely versatile payment collection process as it works effectively for businesses of all sizes and across all industries. The customer can set up their Direct Debit to send to your organisation in a few simple steps using a Direct Debit mandate form. 

Once this has been completed and approved - which has been proven as an efficient process - you, or your Direct Debit management service, pull the agreed amount of money from the customer’s account on the day specified on the mandate form. 

In terms of timeframe, it usually takes a Direct Debit around three working days to be completely set up after it has been approved so that it is ready to be taken on the first agreed date. 

As a business, you will receive a range of Direct Debit reports from Bacs which enable you to deliver improved control over your payments. Reports, such as ADDACS (Automated Direct Debit Amendment and Cancellation Service), allow you to rapidly gain access to information about any changes or cancellations that have occurred to your customers’ Direct Debits so that you can manage financial consistency. 

Working out how to collect Direct Debits can be an intricate process based on customer knowledge and banking organisation. A Direct Debit management service can undertake all of these tasks for you so that you can focus on key business objectives.

Do banks charge for collecting Direct Debits?

Banks do charge for collecting Direct Debits. This fee can vary depending on the provider. Some may have a sliding scale of Direct Debit transaction charges related to how many payments you take from customers each month or for each period. 

Banks may offer a flat fee for Direct Debit processing with add-on services available, based on your individual business or customer needs. In comparison to debit or credit card transactions, Direct Debit is a cost-effective option. Debit or credit cards can cost around 3% each for transactions, whereas Direct Debit is typically charged at a lower fee. 

A major advantage to partnering with a Direct Debit management service is that there is diversity within the products you access. Your Direct Debit package will be based on the services you need to provide for your customers and the processes your business requires to operate efficiently. 

Is Direct Debit flexible?

Fortunately, Direct Debit is an agile payment method. It enables you to create recurring or one-off payments for customers. You can also alter payment amounts and dates without having to contact customers who have already given prior authorisation.

Direct debit puts you in control of how payments are made to your organisation. It enables you to reduce late or missing payments, which can hinder cash flow and take up valuable time. 

Automation of Direct Debits also delivers a smooth, efficient, and rapid payment collection process that minimises human error and creates a low-fuss payment schedule. 

In addition, customers find Direct Debit often suits their needs. They can choose payment dates and have the power to cancel a Direct Debit transaction at any time, making this a convenient, safe, and effective way to gather payments. 

How Interbacs makes Direct Debit easy for you

Interbacs is one of the UK’s leading Direct Debit providers and a Bacs Approved Bureau. We reduce your administrative hassle and the expense of processing payments internally. 

Our Bacs Approved Bureau has many benefits, including:

• Instant access: funds clear directly into your account, and we provide optional ADDACS and ARUDD processing.
• Company database: we empower your business with its own company database and DDMS processing software.
• Documentation design: create professional-looking Direct Debit instructions and mandatory letters.
• Compliance guarantee: we make sure your website and official Direct Debit documents conform to Bacs rules. 
• Dedicated support: with your very own dedicated Bacs Bureau account manager and Bacs-trained processing team.
• Custom website: we build securely hosted, Bacs-compliant web solutions, including online sign-up pages, and account validation pages.

Discover how to collect Direct Debits from customers and what a Direct Debit management service can do for your business with Interbacs. 

For more information about our Bacs Approved Bureau service or any of our other products and services, please contact us.