Direct Debit Solution – The Rules And Basics

Introduction

These days, many businesses look for the best ways of streamlining their payment collecting systems, with the aim of reducing their costs and the time it takes to complete the transactions. One of the best means of doing that is undoubtedly the direct debit solution. This solution allows the businesses to conduct regular transactions easily and without any hassle, while also processing them for direct debit payments. As a result of its benefits and effectiveness, millions of people, all across the world, have started using the direct debit approach for collecting payments.

The method itself

The direct debit method is mainly used to pay for invoice amounts, online subscriptions and so on. Direct debit is mainly popular because it provides the users with a strong money back guarantee, in case there are some irregularities or errors occurring during the transactions. Also, users are also regularly notified of any data variations or changes in regards to amount deductions. Direct debit also allows the customers to stretch their payment periods over a much longer period and provides real-time multi currency processing as well. Given that it relies on a safe and rather simple infrastructure, this method also makes the transactions much more secure and convenient, given how the users do not have to possess a bank account in every country to process their transactions.

A simple procedure

In general, direct debt process is quite similar to credit processing. All the important data is typically collected online, or via the phone or fax. Once collected, it is submitted to the bank or the payment processor where the payment is being processed. Anyone who has a bank account is in a position to use a direct debit. However, in certain countries, individuals need special permissions, which can be acquired either via an order form or an invoice.

Lower costs

Aside from being quite simple and convenient, direct debit processing is also favored because it lowers bank charges and the costs of debt collections. With it, the users are given access to a larger market with a lower credit card penetration. Also, the users gain a more easily predictable cash flow and are given the means of establishing a better customer base. Also, direct debit processing is far less prone to frauds, as opposed to the majority of other payment methods.

The Scheme

When it comes to direct debit rules and regulations, users should know that they are under the protection of the Direct Debit scheme. All financial institutions and banks are a part of this scheme. For the users, this scheme means the following:

• They are in a position to cancel a direct debit at any time.
• Users are entitled to receive all the relevant information from their beneficiaries, which includes any changes to payments or dates.
• If a bank fails to collect a user’s money properly or makes an error on its part, it is required to give that user a full refund.

Whether an individual runs a small business or is involved in a high-risk business or a low-risk industry, they can easily benefit from a direct debit solution. From its simplicity and convenience to its cost-effectiveness, this method has some advantages over other methods. Therefore, it is no wonder why many people prefer it over credit cards and cheques.