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Direct Debit Payments Explained

If your business offers a recurring service, direct debit payments can make your life easier

A direct debit payment is a payment taken automatically from a customer's bank account periodically. It's often offered as a payment method by businesses that provide subscription services or other services that require an ongoing commitment from a customer.

 

The main benefit of direct debit payments, for businesses and consumers, is their simplicity. Neither your business nor the customer has to worry about remembering the payment, so payments aren't missed and the relationship between you and your customers is more easily managed. 

How to Take Direct Debit Payments

The way direct debits work is fairly simple. Your customer's payment is taken from their account automatically, usually on a predetermined date, and your business then 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. 

 

You also need to be eligible to take direct debit payments, which 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 the green light 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. 

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 keeping on top of recurring payments. That's not where the benefits of direct debit payments though. Other benefits include having greater predictability, greater retention, and better relationships with your customers.

 

Having a better idea of exactly 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 therefore more 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

Your Questions Answered

In most cases, you'll need a Service User Number (SUN) to collect payments. Banks often only grant SUNs to well-established businesses. 

 

Alternatively, you can use a third-party provider to handle SUN acquisition and payment collection.

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.

Qualify To Reduce Your Payment
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Do you currently accept card payments?
Complete our short form, it only takes a minute!
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Our Partners
  • Barclays Bank PLC
  • FirmEU BV
  • Fiserv (Europe) Limited
  • Handepay Limited
  • Independent Merchant Services Limited
  • Inspire Payment Services Limited
  • ResQ Limited
  • SumUp Payments Limited
  • Take Payments Limited
  • The Redwood Group and Associates Limited
  • Tide Platform Limited
  • WorldPay (UK) Limited
  • Yotta Digital Ltd
Our Products
  • Business Accountancy
  • Business Epos Systems
  • Business Telephone Systems
  • Commercial Waste Collection
  • Digital Marketing
  • Fleet Tracking
  • Invoice Finance
  • Merchant Accounts
  • Website Design
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