What is Direct Debit reversal?

A Direct Debit reversal takes place when a customer disputes a payment and the money is returned back into their account. Unlike an ‘insufficient funds’ or ‘account closed’ bounceback, a Direct Debit reversal can only take place after a transaction has already occurred.

The Direct Debit Guarantee

The Direct Debit guarantee is a set of rules put in place to protect customers from incorrect or fraudulent payments.

Under the rules of the Direct Debit guarantee, a customer is entitled to a full and immediate refund (aka. a Direct Debit reversal) if a payment doesn’t marry up with the terms laid out in the advanced notice (i.e. a payment notice issued up to 10 days before a payment is taken).

This will take place if:

  • A service provider taking more money than specified
  • A payment being taken out on the wrong date

How to make an indemnity claim

In reality, only 0.2% of all Direct Debit payments are refunded. It remains the safest and easiest method of making ongoing payments.

If you have noticed some anomalies with your Direct Debit payments, however, then an indemnity claim should be raised with your bank. They are the ones who will make the final decision – not your service provider. To make an indemnity claim, you must be able to show that there has been an error in the payment process.

Once the decision has been finalised, the bank will notify your service provider and the money will be refunded back into your account within 14 days. The bank will generally accept the word of you, the payer, as gospel. As such, service providers have the ability to appeal an indemnity claim within 14 working days of an indemnity claim being settled.


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