- Bacs, Direct Debit, Direct Debit Guarantee, statistics
- Direct Debit
- 02, AUG 2017
Unpicking the Statistics of Direct Debit Popularity
The popularity of Direct Debit has been on the rise since its inception in 1968 and recent statistics indicate that the trend shows no signs of abating. In the last 10 years the volume of Direct Debit transactions processed each year has increased from 2.9 million to 4.1 billion, and in 2016 alone, Direct Debit payments amounted to a staggering £1,262 billion. Based on current trends and with 4.9% growth in the use of Direct Debit solutions in 2016, Bacs project the number of transactions will rise to approximately 4.6 billion by 2026.
Benefits of Direct Debit payments
Perhaps the key reason for the popularity of Direct Debits is the range of benefits it offers both customers and businesses. Let’s take a closer look.
Benefits of Direct Debit for customers
Customers paying by Direct Debit enjoy many benefits, from confidence about their finances to peace of mind that their bills are taken care of.
Increasing consumer confidence
As the preferred payment method for over 50% of bill-payers in the UK, the latest figures reveal that 9 out of 10 people with a bank account have at least one Direct Debit, while just over a third of households use it for more than 6 of their regular payments. With over three-quarters of people having a favourable opinion of Direct Debit, it’s evident that consumers are increasingly recognising the benefits of Direct Debit over more traditional payment methods.
Ease and convenience
In a busy world, ease and convenience are particularly important issues for the average customer when choosing prospective payment methods – the May 2017 Bacs – Direct Debit Consultation Outcomes publication reports very positive statistics, indicating that 88% of consumers surveyed felt that being able to forget about a payment once it is set up is a determining factor. The ease with which a Direct Debit Instruction can be set up was also highlighted as a positive, with just under 90% of respondents rating the process as “straightforward”.
The money-saving aspects of switching to Direct Debit are also a draw for consumers. An increasing number of phone, broadband and energy companies offer discounts and cheaper tariffs for customers electing to pay in this way with an average saving of around 7%. In addition to these financial incentives, paying by Direct Debit ensures that the customer avoids additional fees that may be incurred as a result of late or non-payment.
Safe and secure
Among the benefits of Direct Debit for customers is that payments are efficient, safe and secure. Direct Debit is widely trusted as a payment method and the protection afforded under the Direct Debit Guarantee provides further reassurance to consumers.
Benefits of Direct Debit for business
Though use of Direct Debit is on the increase generally and is certainly popular with many businesses, Service User take-up somewhat lags behind that of consumers. However, the evidence shows that switching to collecting payments via Direct Debit can have a significant impact on business efficiency and cash flow.
As Direct Debit doesn’t involve the same level of administration that some of the more traditional payment methods require this can save businesses valuable time and therefore money. It also gives organisations more control over when money will be credited to their account, improving their ability to manage cash flow. This is a particularly important issue for small- and medium-sized businesses – it’s estimated that the cost of pursuing overdue payments for small enterprises is around £2.16 billion.
This can have a considerable knock-on effect – the statistics show that 16% of small businesses have difficulty paying staff and 32% are unable to pay suppliers on time due to late payment debt. In light of this, the advantages of collecting regular, automated payments via Direct Debit are obvious, and with 98% of payments being processed successfully, businesses can be assured of a more efficient collection process as well as increased customer confidence.
Get on board with Direct Debit
Given the statistics, it’s hardly surprising that Direct Debit is the most popular bill-payment method in the UK.
At Clear Direct Debit we have years of experience in giving clear, professional advice, enabling a wide variety of clients to improve their businesses with the benefits of Direct Debit payments.
We offer Bacs Accredited Direct Debit Training to ensure the team is fully prepared for Direct Debit implementation. We also offer Bacs Accredited Consultancy Services and a Bacs Approved Bureau Service.
To see how we can make Direct Debit work for you, get in touch with our experts.