Waiting for payments from customers is undoubtedly one of the most frustrating aspects of running a...
50 Years of Direct Debit
With Direct Debit being so ingrained in our everyday life, sometimes it’s hard to remember that it was born in 1970, a year where Glastonbury held its first festival, and the UK fell into a sense of flower power.
This growth has manifested more powerfully throughout the digital age. As previously, Direct Debits were predominantly used to pay bills such as mortgage or rent, gas and electricity. Nowadays, Direct Debits are used for a plethora of reasons: Streaming services, mobile phone bills, broadband bundles, gaming subscriptions. There are also many payment plan schemes, which allow big purchases to be broken down into smaller regular Direct Debits.
In 2020, Direct Debits become a far more dominant payment method due to the pandemic. People don’t want to leave their house, and having the option to pay for an item and have it delivered was more important than ever before. In fact, PayUK saw the biggest jump in their success between 2019 and 2020, as seen below:
- 1970 – 30 million
- 1980 – 171 million
- 1990 – 836 million
- 2000 – 2 billion
- 2010 – 3.2 billion
- 2019 – 4.49 billion
- 2020 – 78.5 billion +
The Payment Processing Industry has experienced exponential growth in the previous year, and with it so have the businesses which use Direct Debit as their main form of income.
One of the advantages of Direct Debit is that it is a frictionless payment experience. Payers often find that the peace of mind that is assured with Direct Debits is one of its major incentives. It means that with subscriptions, payers can be assured that their payment will come out of their accounts as previously scheduled.
As our culture is slowly shifting towards more subscription-based services, Direct Debits will become more relevant. If used correctly, the Direct Debit system can ensure a business can secure a cash flow from its customers. Through creating a policy of regular payments, customers will remain loyal to a business due to their reliability. That is if they ensure their service is given after they have paid of course.
The Direct Debit guarantee also gives a layer of insurance to the customer, knowing that they are protected really helps in initially drawing in and creating a customer base. The Direct Debit Guarantee is in place for the rare occurrence that there is an error in the collection of the payment, for instance, if the frequency or amount is incorrect.
The customer can cancel a Direct Debit at any time, through the business or their banks. Allowing them total control of their policy. Furthermore, if there is to be a change of the amount collected, the customer must be notified.
In creating a successful business, you must keep up to date and be imaginative with process automation. Using a Direct Debit scheme is an automation process that will allow your business to have the time to become creative elsewhere, securing your growth.
In its long history, Direct Debits have changed the UK economy into a far more streamlined environment, where payers can be assured that they will pay efficiently. Furthermore, this streamlining allows for businesses to save time on internal admin. In its 50 year history, Direct Debits have positively impacted the UK economy, and continue to grow.