DFC guides – what is a Direct Debit mandate?

A Direct Debit mandate gives service providers written permission to take payments from their customers bank accounts. Payments cannot be collected until the mandate has been signed and agreed by the customer.

Direct Debits are the safest and most trusted method of collecting recurring payments. The average consumer has six Direct Debits and in 2018 alone, 6.4 billion transactions were processed. Direct Debit’s popularity can be directly attributed to its airtight security processes, which start with a Direct Debit mandate, also known as a Direct Debit instruction.

 

How a Direct Debit mandate works

Before any payments can be collected from a customer’s bank account, a Direct Debit mandate must be signed. This gives service providers the green light to take future payments under the following caveats:

Once the mandate has been signed and processed, all future payments are authorised
Customers are given advance notice before payments are taken, providing customers with a notification at least ten working days prior to collection.
All collections are covered under the Direct Debit Guarantee.

The Direct Debit Guarantee is a set of guidelines devised by the automated payments regulatory body, Bacs, safeguarding customers in the event of fraudulent payments and errors. The Direct Debit Guarantee text must be visible on Direct Debit mandates. If the instruction is being filled out online then the Direct Debit Guarantee must be presented to the user prior to them clicking submit.

 

Setting up a Direct Debit mandate

Direct Debit mandates can be completed in three primary ways:

1.On paper
2.Over the phone, also known as electronic file transfer
3.Online

In order to fill in a Direct Debit mandate, customers require their name, bank name, sort code and account number. Once they have filled out their information, the mandate will need to be sent to Bacs, who will then transfer it onto the banks.

 

Two types of mandate

Paper mandate forms

Direct Debit mandate forms must be filled out by the customer and returned to a member of your staff. It is then your job to submit this to the banks. Mandate forms must conform with the layout and style instructed under the Direct Debit scheme rules.

Electronic mandate forms

In many cases, it’s possible for Direct Debit mandate forms to be filled out online or over the phone. This is more convenient for the customer and relinquishes the reliance on your in-house teams. Without a physical form for customers to fill out, special approval to take paperless Direct Debits will need to be granted from the banks.

About DFC

DFC is part of Transaction Services Group (TSG), a leading revenue management solutions provider across Australasia, the UK, Europe, and the USA. DFC offers a full revenue management service across the customer journey. Its purpose is to drive up customer acquisition as well as manage and maximise customer revenue.

As Direct Debit experts, DFC takes pressure off organisations by handling billing, customer service and credit control, whilst offering cutting-edge solutions that benefit businesses and customers. DFC reduces the Direct Debit joining process to just three minutes for customers, whilst increasing the average length of membership by three months.

For more information on how DFC can help your business, visit debitfinance.co.uk