What is a Direct Debit mandate?

Direct Debits are the safest and most trusted method of collecting recurring payments. The average consumer is thought to have around six Direct Debits at any one time, thanks to the added security and convenience they provide, which starts with a Direct Debit mandate. If you’re wondering what a Direct Debit mandate is, continue reading to find out everything you need to know.

What is a Direct Debit mandate?

A Direct Debit mandate gives service providers permission to take payments from customer’s bank accounts over a recurring time period. Payments cannot be collected until the mandate has been agreed to and signed by the customer.

Once signed, payments have been authorised so businesses can start to take them from customers. A Direct Debit mandate states that all Direct Debit payments that are collected are protected by the Direct Debit guarantee. The mandate should also state that customers are given advance notice before payments are taken, with a notification of at least 5 days prior (10 is recommended).

How to set up a Direct Debit mandate?

In order to fill in a Direct Debit mandate, a customer would need to provide their name, the name of their bank, account number and sort code. Once all of the information has been filled in, the mandate is sent to Bacs, who transfer it to the bank.

There are two ways to agree to a Direct Debit mandate, and they are:

• Paper
• Paperless

There are a wide variety of paperless methods, which are:

• Telephone
• Internet
• Face to face
• Telephone keypad
• Interactive TV
• Pen tablet
• Electronic signature

On paper

A Direct Debit mandate can be signed in person on paper. For example, a customer could be buying a new smartphone at a store. The documentation to sign to agree to monthly payments would be the Direct Debit mandate.

Over the phone

Direct debit mandates can be agreed over the phone, where the customers would read out their details to the member of staff. The documentation can also be transferred via email to read and fill in.

Online

Online is the easiest and quickest way to agree to a Direct Debit mandate in 2022. Many companies have now taken most services online, providing ease for their customers.

Benefits of a Direct Debit

There are many benefits of using Direct Debits to make recurring payments for a wide range of services and products.

A customer should consider what they pay monthly, and consider how much more stressful their life would be without Direct Debits. Energy bills, phone bills, internet service, rent or mortgage payments, a gym membership, television services like Netflix, and more, are all likely to be paid using Direct Debits. Without the use of an automated payment system set up, it would take a huge amount of time sorting payments every month.

The benefits of Direct Debits are clear for all to see:

Prevent late payments - Direct Debits give customers the freedom to know that all of their monthly payments will be made on time and in the correct amount. Manually controlling every recurring payment may lead to a missed payment from time to time, as there would be so many to manage.

Reduces admin time - Manually looking after every payment every month would take a lot of time to manage. It would take up a whole evening trying to make all of the separate payments and control which ones have or haven’t been paid.

Easy to set up and forget - Setting up a Direct Debit in 2022 is easier than ever. No longer do customers need to speak to a single person as it can all be done online. Once it has been set up, they can forget about it as the payments are completely automated and stop either at the end of the contract that’s been agreed, or when they’re manually stopped.

Reduces payment failures - Direct debit payments come straight out of a bank account, but if a customer were to manually pay them they may have to use their debit card, which could have expired. Bank accounts don’t expire like cards. From a business perspective, this could cause delays and financial issues, as well as wasted time chasing payments from customers.

Prevent interruption of service - Direct Debits add a level of prevention against interruption of service. If you stop paying for Netflix, Sky, and more, the service will eventually be suspended.

Direct Debit management at Interbacs

Direct Debit is the preferred payment method for most businesses that collect regular subscriptions and fees. It provides a great deal of advantages, including alleviating processing stresses for your team. This allows your business to focus on growth, rather than manual data processing. Interbacs’ Direct Debit management greatly improves your business’ cash flow.

Improving your collection process can improve the customer journey, assisting you to attract new customers and protect your brand. The ability to provide hassle-free payment plans for your customers will give you a competitive edge over your rivals. Furthermore, our paperless Direct Debit solutions ensure your company is as carbon neutral as possible.

Who are we?

Interbacs was established by Bacs software developing experts with more than 30 years of experience in Bacs payment services and business payment software delivery.