Jun 26, 2017

Direct Debit vs recurring card payments

We are often asked why organisations should select Direct Debit to collect regular payments from their customers, members or donors, in preference to simply issuing recurring credit or debit card transactions.

This article looks at why Direct Debit is preferable for consumers. To read more on the benefits for businesses, take a look at our more recent blog post.

Whilst the consumer has the legal right to cancel and reclaim any card payments that have been taken in error, the process can be difficult.

Let’s take a look at the main differences between the two collection methods.


Direct Debit vs recurring card payments


Direct Debit

  • You authorise an organisation to take money from your bank account for a fixed or variable amount.
  • You have the right to cancel the Direct Debit at any time by contacting your bank (depending on the contract, you may wish to confirm the cancellation with the organisation as well).
  • The Direct Debit Guarantee provides consumers with confidence that if money is taken in error, they can receive a full and immediate refund from their bank, not the organisation itself.

Recurring card payments

  • You give the organisation your card details. They will ask for the credit or debit card number, rather than the bank details.
  • Cancelling a recurring card payment could be difficult. When cancelling a credit card, the account stays open for a few more months to ensure there haven’t been any payments made on the card that haven’t been processed yet. If the recurring payment is still being requested by the organisation, it will count as a new incoming payment, causing the account to remain open and the organisation asking you to settle payment.
  • Put simply, having a recurring card payment means giving the authority to a company to collect payment whenever and whatever amount they think you owe them.

These are just a few of the many reasons why over 90% of UK consumers have at least one Direct Debit to pay their regular bills.

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