- Benefits of Direct Debit, Direct Debit
- Bacs, Direct Debit, Guarantee, Security
- 11, DEC 2019
Can you use Direct Debits for one-off payments?
Answer: YES! And, one-off Direct Debits offer numerous advantages for all parties!
Blog by Michael Nwadinobi.
Direct Debits are one of the most common methods of payments in the UK with Bacs processing 6.4 billion transactions in 2018 with a value of almost £5 trillion. However, most people feel that Direct Debits can only be used for recurring payments and are not aware that you can also use one-off Direct Debits. This means the benefits of collecting payments via one-off Direct Debits are never realised, leading to organisations resorting to collecting payments by other means of payment such as cash, card or cheque.
If you already process Direct Debits, then you will be aware of the 3-day Bacs cycle. It takes at least 3 working days to collect payment so if you are an industry that delivers immediate or next day delivery of goods and services then you may not want to use Direct Debit to take payment. However, if the timing is not your major concern then there are several benefits associated with one-off Direct Debits such as:
Customers are protected under the Direct Debit Guarantee, making Direct Debit the UK’s safest and most trusted payment model. If an error is made the payment service provider (bank) will rectify this with a full and immediate refund.
The cost of processing a cheque, credit or debit card payment is about 1% of the transaction cost while Direct Debits are about 0.1% of the transaction cost making Direct Debits cheaper than processing cheques or cards. There are also indirect cost savings associated with Direct Debit as a result of the time saved when Direct Debits are done properly.
Direct Debits are controlled by the Service User rather than the customer which means the Service User can better manage their cash flow as well as save a lot of time and effort spent on chasing invoices. If you already collect payments from the client by Direct Debit then you already have their bank details so you could easily take a one-off payment by amending their next collection amount and sending them advance notice of the new amount rather than having to discuss alternative, more costly options with the client.
According to the Bacs website, Direct Debits soared to nearly 4.4 billion transactions in 2018 – that’s more than eight Direct Debits for every UK adult. Customers are used to payments by Direct Debit. Direct Debit is easy to set up and the customer is communicated with through the whole Direct Debit process. They get informed when the Direct Debit is set up and must be informed if there are any changes to the amount, collection date or frequency and they can also rest assured that they have the guarantee as mentioned above to fall back on if anything goes wrong.
So in summary…..
As answered at the beginning, yes you can use Direct Debit for one-off payments. I have stated above all the benefits of using Direct Debit for recurring payments and the great thing is, all these are benefits an organisation can realise by using Direct Debits for one-off payments as well.
Clear Direct Debit work with organisations that collect both recurring and one-off Direct Debits so do feel free to get in contact with us to discuss making your payments more efficient.