Security – Direct Debit v Card Payments

When it comes to the security of our money and financial transactions, most of us would place security as a fairly high priority. Direct Debit is almost certainly the best method of payment open to customers and yet they still sometimes mistrust it or prefer to pay by other methods. We thought we would do a quick comparison to look at Direct Debit versus the alternatives with Payer security in mind.  So, in this article, lets look at Direct Debit versus paying by card.

How secure is payment by card? With the growth in payments online and over the phone we are constantly being asked for our card details and so have become fairly used to dishing our card details out without much thought. What are the risks?

Card fraud for UK-issued credit and debit cards in 2010 ran at a million pounds per day according to data from the UK cards association. The good news is that the figure for 2011 showed a slight fall. Also card companies have a legal obligation to reimburse fraud victims, and the onus has always been on the card company to prove any negligence on their customer’s part. That said many people find the process of getting reimbursed complex and unhelpful. There is no guarantee how quickly you will get your money back or even that you will.

But how does that compare to Direct Debit?

If any money is taken out of your bank account by Direct Debit and you have not authorised it then you are entitled to a full and imediate refund. Your bank should accept your word and you should see the funds back in your account immediately. This is due to the Direct Debit Guarantee (click to read it in full) – The protection is unlimited in time or amount.

Aside of card fraud we are often now asked for our card details by legitimate providers. In some cases they are allowed to store our card details securely so that they can use them again at time of renewal or additional purchases. This is known as continous payments authority. There have been real issues with this in the past where companies were not informing consumers that they were retaining details and not making them aware that they were retaining them for future use. It is also often very difficult to get your money back when you notice a payment has been taken that you weren’t aware of. The Office of Fair Trading have looked into this recently amid concerns and a statement from December 2012 on their website showed that they “found signs that traders are not making it clear to customers that they are being signed up to a CPA, or about their rights to cancel. CPAs are often confused with direct debits, but they do not offer the same guarantees”

The Direct Debit Guarantee is about the most powerful protection available to consumers and given a choice of paying by card or Direct Debit , it’s a no brainer isn’t it?

If you offer Direct Debit to your customer’s it may be a good idea to remind them of this and highlight the Direct Debit Guarantee when asking how they wish to pay?

If you are looking for other ways to promote Direct Debit to your customers or improve your Direct Debit knowledge have a look at the courses on offer via our main website training dates and details