NoChex Review: The Best Alternative Merchant Account?
After carving out a space in the merchant account market, could Nochex be what your business
How To Take Direct Debit Payments
If your business offers a recurring service, direct debit payments can make your life easier.
What is Direct Debit?
A direct debit payment is a payment taken automatically from a customer’s bank account. It’s often used by businesses that provide services requiring an ongoing commitment from a customer.
The main benefit of direct debit payments (which are different to standing orders), for businesses and consumers, is their simplicity. Neither your business nor the customer has to worry about remembering the payment. This means payments aren’t missed and your customers are more easily managed.
Taking direct debit payments can also increase the predictability of your finances, which can work well for you and your merchant account provider.
If you’re still finding your feet with digital payments, and you want to know more about merchant accounts, read our page on everything you need to know about merchant accounts.
How to Take Direct Debit Payments
The way direct debits work is fairly simple. Your customer’s payment is taken from their account automatically and your business continues to provide the customer with your service.
You need an agreement from your customers to take payments automatically, so make sure it’s clear what they are opting in for. You don’t want your customers to be confused about what it is they’ve committed to.
Your business also needs to be eligible to take direct debit payments. This means you need to get a Service User Number (SUN) – a six-digit number businesses use to get paid via direct debit. You can get a SUN directly from your bank, provided you meet its criteria.
Once your bank and your customers have given you permission to take payments automatically, you just need to set up the frequency and size of your payment.
The most important thing to remember about this part is that your customers must be given 10 days’ notice before each payment is taken. The notice needs to detail when the payment will be taken and how much it will be.
Want to know more about how card payments work?
We have in-depth guides that fully explain all you need to know about taking payments. Explore below:
Benefits of Taking Direct Debit Payments
As mentioned above, the most obvious benefit of accepting direct debit payments is the simplicity it brings to the hassle of managing recurring payments. Other benefits include greater predictability, greater retention, and better relationships with your customers.
Having a better idea of how much revenue you’ve got coming in from your customers and knowing exactly when you’ll be receiving it can make your business’s general finances more predictable and manageable. You can also use this information to inform future decisions about your business growth.
Having customers committed to your business on an ongoing basis also means they’re more likely to stick around as they already know they like what you provide, making the job of your CRM that much easier.
With customers already engaged heavily with your business and your brand, they’re right where you want them to be to develop your relationship with them. You can use their pre-existing interest to market more of your services, offer special discounts or offers, or reward their loyalty with a giveaway. These things will help keep their engagement with your brand nice and high.
FAQs
How can I start taking direct debit payments?
In most cases, you’ll need a Service User Number (SUN) to collect payments. Banks often only grant SUNs to well-established businesses that already have things like merchant accounts in place.
Alternatively, you can use a third-party provider to handle SUN acquisition and payment collection.
What are the benefits of taking direct debit payments?
The most obvious benefit of accepting direct debit payments is the simplicity it brings to the hassle of keeping on top of recurring payments.
Other benefits include having greater predictability, greater retention, and better relationships with your customers.
What's Trending?
Find out how you could save your business money
Square vs SumUp: Which is Better For Your Business?
They’re two major players in the mobile card machine game, but which is better? They’re two
Takepayments vs Zettle: Which is Better For Small Businesses?
We explore the hardware, software, and pricing structures of two of the UK’s most popular merchant
