UK payment statistics released by Bacs in February showed that Direct Debits grew by a whopping 5% over 2016. This makes Direct Debit one of the most trusted and fastest growing payment solutions in the UK.
But despite this, misconceptions still remain about this method of payment. As such, we’ve highlighted some of the most coming myths surrounding Direct Debit.
Myth 1: Direct Debit is difficult to set up and requires a lot of paperwork
There was certainly a time when Direct Debit took longer to implement. The process was bound to manual sign-ins that required face-to-face meetings or communication by post and this often necessitated a lot of paperwork.
Today, Direct Debit is automated and paperless. Most banks or bureaus provide an easy and quick set up via the phone or internet. DFC’s FastDD offers a simple online solution that allows your customers to sign up quickly and simple, 24/7. Payments can’t be delayed, lost or forgotten and admin is minimal.
Myth 2: Direct Debit is inflexible
Unlike standing orders which are fixed, Direct Debit is highly flexible. Billing days and amounts are adjustable in line with customer needs, allowing businesses and consumers to operate more efficiently with each other.
Through DFC, billing can be scheduled on a weekly, fortnightly, 4 weekly, monthly, quarterly or annual basis, from Monday through to Friday. By giving your customers and clients this choice, you can cement their loyalty and ensure a continuous flow of cash throughout the year.
Myth 3: Direct Debit is unsafe
This is simply not true. Before a company can offer Direct Debit as a payment option it must go through a rigorous vetting process. All customers who choose to pay by Direct Debit are protected by the Direct Debit guarantee thereafter. This covers:
- Advance notice if collecting dates or amounts change
- An immediate money back guarantee in the event of an error
- The right to cancel your direct debit payments at any time
Myth 4: Only big companies can use Direct Debit
It’s not hard to understand why this myth exists. The vast majority of people began using Direct Debit to pay off their electricity or phone bills to the big industry players, making it hard to see an alternative existence that allows small to medium companies to use it too.
But Direct Debit is more about the cash flow of a business than its size. Late and missed payments remain a major issue for companies that take payments on a regular basis. Direct Debit helps them to collect the money when it suits them and the customer, whilst streamlining administration massively.
Myth 5: Direct Debit is expensive
You’ll find that it’s actually quite the opposite. If you accept credit cards, you can expect this to cost two to three per cent per transaction, as well as a flat fee of 20-30p. Direct Debit proves a much cheaper alternative than cash, cheque and card.
It also requires little maintenance outside of payment tracking and monitoring, and all those extra hours can be ploughed back into the business – like deciding on marketing incentives to help get new customers signed up to your Direct Debit offer!