Sep 16, 2019

How and why Direct Debit is used for variable and one-off payments

Direct Debit is commonly associated with regular, fixed payments, making them super easy to manage by removing the hassle of making repeat individual payments to the same organisation. You likely already use Direct Debit to pay your rent or bills, a gym membership or magazine subscription. But they’re also great for variable and one-off payments, and here we explain why.
 

 

Direct Debit for Variable Payments

Unlike standing orders, Direct Debits are pretty versatile and you can use them even when payments vary in amount. For example, paying organisations that charge you by usage, when you want to upgrade or downgrade a subscription or where payments are likely to change by season or year. This may include your utility bills or council tax and payments to service providers such as train operators.

For organisations, the ability to vary how much you take from your customers is really handy, and doing so by Direct Debit offers your customer the confidence that they will receive advance notice of the change as agreed in the Direct Debit Guarantee. If you use a bureau such as SmartDebit, your bureau can assist in sending these notifications electronically and automatically to reduce your administration. Direct Debit not only automates these regular payments, it can also be significantly cheaper than accepting credit cards.
 

Direct Debit for One-off Payments

Direct Debit is also convenient if you want to make a single payment. While they don’t offer immediacy, Direct Debit can be a good option if you want to be covered by the Direct Debit Guarantee and you wish payment to be made on an agreed future date.

Allowing one-off Direct Debit payments is particularly beneficial to organisations following last year’s ban on consumer credit card fees. Under the new rules, consumers are no longer charged a fee for opting to pay by credit card. Instead, the fees fall on the company to pay and they can be quite hefty. Enabling single payments by Direct Debit removes these fees and saves you money. In addition, if you wish to set up one-off payments for a later date, such as an invoice settlement, then Direct Debit can be a convenient option.
 
SmartDebit helps organisations to realise the benefits of Direct Debit. If you want to improve your cashflow, reduce administration and cut customer churn, Contact Us.

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