Best practise for secure Direct Debit collections

The GDPR is now in force! Are you locking your work computers? Have you updated your passwords? And have you reassessed your Direct Debit strategy?

Whilst Direct Debit is one of the safest payment methods available in the UK (governed under the rules of the Direct Debit Guarantee), safeguards are a vital facet in any situation where money and personal data unite.

Here are some of the safety measures you can put in place to ensure your Direct Debit practise operates smoothly:

  1. Use online joining – gyms and fitness centres, in particular, have lorded online joining as the holy grail of membership acquisition. Online joining, such as DFC’s FastDD, is a safe way for customers to sign up to a Direct Debit. Automatic bank verification reduces delays and errors on first payment, and all data is locked away in a paperless vault (aka. Your CRM).
  2. Keep the bank and Bacs in the loop – particularly with regards to your security info. If this information is incorrect, then they may not be able to get in touch regarding important matters. They’re also less likely to accept authorised verbal instructions.
  3. Develop a damage control strategy – most operations function much more efficiently when processes are put in place. A disaster mitigation plan will set the wheels in motion to handle something as small as late payments (which are unfortunately a given) to rarer crises such as system failures.
  4. Use a bureau – this is arguably some of the best advice you will receive, in this case for contingency, but also for many other motives. A bureau will handle every aspect of the Direct Debit process for you, from the attainment of a member or subscriber to customer service and data control. Bureaus are the font of knowledge on everything Direct Debit. Security is their forte and they’re happy to remove the onus from you.

 

Who is DFC?

DFC is a leading Direct Debit bureau offering a transparent service, with clear pricing and no hidden extras.

DFC’s mission is to make our clients business easier and help improve your relationships with your customers so that they stay longer. You can let DFC collect your Direct Debits, while you concentrate on running and growing your business.

A who’s who of Direct Debit

Much like with any banking or payment process, the Direct Debit cycle involves a number of key players who work tirelessly behind the scenes to ensure Direct Debit mandates move forward without a hitch.

Thanks to these guys, the public can submit a Direct Debit quickly and easily from the comfort of their couch without any hassle. Businesses can also take a break from lengthy administration duties and maintain a better grasp on their finances. Who exactly are we talking about?

The organisation that the customer is paying to

If a customer is happy to utilise the services of an organisation, they might set up a Direct Debit with them. This can either be for ongoing or one-off payments and can be set up over the phone, the internet or via a Direct Debit Instruction form. This information will then be passed on from the organisation to the bank, giving the bank permission to collect money from the customer account.

 

The bank/building society

Banks and building societies operate as the middleman between the organisation and customer. They are responsible for responding to all requests, be it sending money to and from accounts, handling default payments and refunding money taken in error. The Direct Debit process operates over a three-day window from the submission of a payment until the final account entry stage.

 

Bacs Payment Schemes Limited

Bacs is the organisation responsible for the efficient operation of the Direct Debit scheme. They write the rulebook on what is and isn’t acceptable and ensure that the scheme upholds the highest industry standards. They don’t have a direct relationship with customers. Instead, they remain in the background overseeing the process and ensuring it remains airtight for consumers and businesses alike.

 

Financial Ombudsmen

This is the independent service set up by Parliament for settling financial disputes and maladministration between consumers and businesses. They will make circumstantial decisions in each case based on what is fair and reasonable.  They must take into account relevant laws, codes of practice and industry guidelines and standards.

 

Direct Debit bureau

Direct Debit bureaus, like DFC, are the experts in managing all aspects of the Direct Debit scheme from setup through to collection. This takes the onus of busy organisations which don’t have the time or knowledge to manage their collections themselves. Direct Debit bureaus improve cash flow and collection rates and can even offer advice and guidance on the best ways to get new and existing customers on board.

 

Get in touch with DFC today. Our mission is to help you improve your relationships with your customers so that they stay longer. You can leave us to collect your Direct Debits, while you concentrate on running – and growing – your business

Why do businesses choose Direct Debit?

More and more people are using Direct Debit to make their regular payments to a company. The Direct Debit payment process is time and money saving for customers, but it’s equally convenient for businesses, not least because their customer’s love it.

Whether you’re talking your bottom line, customer service or streamlining your processes, Direct Debit is a worthwhile strategy to consider. We’ll name just a few of the main benefits below.

 

Declutter your administration process

Running a company can be exhausting, particularly when you don’t have a handle on incoming payments. Your struggles will end with Direct Debit as this payment method supports your company’s cash flow and encourages payment flexibility. It’s easy to track incoming and outgoing payments because you’re in control.

 

Reward your customers

Direct Debit is the cheapest payment method available in the UK. Many organisations, particularly leisure facilities and retail, channel this into member discounts.  Special offers and incentives for people signing up by Direct Debit will make your business even more attractive to prospects and fend off local competition.

 

Easy marketing

Discounts and incentives aren’t the only way to prick the ears of potential customers. Online joining portals, like DFC’s FastDD, are available 24/7 and easily accessible, whether it’s during morning commutes or sitting back on one’s smartphone. This can be promoted across numerous channels, be it digital or printed collateral, encouraging people to sign up at their convenience.

 

Doing your bit for the planet         

Corporate social responsibility is a buzzword that doesn’t look set to lose popularity anytime soon. Thankfully, paperless Direct Debits allow you to get customers started without you having to think about paper, printing, and storage. This is beneficial to you as it is to your customers and it’s great news for the environment!

 

 

DFC provides revenue management solutions tailored to the needs of your company and clients. You can leave us to collect your Direct Debit’s whilst you concentrate on running – and growing – your business.

Recurring card payments vs Direct Debit – the winner is…

Direct Debit and recurring card payments are amongst the most common methods of making regular payments. Whilst the concept of both is similar, there are slight variables between the two which cause confusion time and time again.

So what’s the difference?

  • Direct Debit – by signing up to Direct Debit, you give an organisation the authority to take money directly from your bank account. Payment times and quantities can be fixed or flexible, but advance notice must be given to you prior to any changes in the amount debited. You have the right to cancel at any time.
  • Recurring card payment (also called a continuous payment authority (CPA)) – recurring card payments operate in a similar fashion, except you give a company or organisation the permission to take money from your debit or credit card. Amounts can be variable and you have the right to cancel at any time.

Choosing between the two comes down to whether you would rather go through a bank (Direct Debit) or a company (CPA). Ultimately, however, you’re guaranteed a much stronger safety net with the bank. This way, you have a middleman orchestrating the process. In fact, the Direct Debit process offers greater protection overall.

 

Make the right decision

A recurring card payment gives companies the authority to charge whatever they want, whenever they want.

This is also true of Direct Debit of course, but stronger safeguards hinder wayward activity. The Direct Debit Guarantee acts as a failsafe so that if an error occurs, you’ll receive a full and immediate refund of your money from your bank rather than the company itself.

Moreover, expect a bigger slog on cancellation, particularly if you’re also thinking about cancelling your credit card. A bank won’t cancel your card instantly. It will likely take a few months to ensure all payments have been processed. Recurring card payments can still take place in this time, forcing your account to stay open for longer.

Finally, it’s worth considering the failure rates and costs of a CPA. Recurring card payments characteristically go hand-in-hand with a monthly fee for a merchant account, as well as a 3% margin and 20p cost per payment. You can also expect a 5% failure rate. On the other hand, Direct Debit charges less than 1% per transaction with a failure rate less than 1%.

If you feel your company could benefit from streamlining its payment process, give us a call on 01908 422 000.

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Is my business eligible for a Bacs Service User Number?

A Service User Number (SUN), also known as an originator ID, is a unique identification number. It is used by Bacs as a distinguisher between organisations that collect Direct Debit payments.

Your SUN is a six numbers long and can be found on all forms of communication as a way of maintaining transactional records. This is handy in the event of, say, payment errors or fraud.

Suppliers can either apply for their own SUN or submit indirectly through a Direct Debit Bureau.

 

How do you obtain a SUN?

In order to obtain your own SUN, you must first apply for sponsorship. This is usually done through a bank. Each bank has its own standards which need to be met. However, it is compulsory that a business:

  • Has a UK sterling bank account
  • Completes and lodges an indemnity with their sponsor

Furthermore, other variables include:

  • An organisations contractual capacity
  • Its financial standing
  • The quality of its administrative control

 

SUN via a Direct Debit bureau

Alternatively, if you don’t have access to your own SUN, you can manage your Direct Debit collections through a third party. This will still necessitate a SUN, but it doesn’t have to be your own. There are two options for this:

  1. Facilities Management – the direct debit bureau will collect and administer Direct Debits themselves through a SUN set up specifically for the merchant. The Facilities Management will maintain ownership of this SUN.
  2. Payments Institution – Payments Institutions are regulated under the Payments Service Directive and manage all their operations via one single SUN. Payments go through the bureau before being paid onwards to the client.

At DFC, we operate using our own SUN. Even so, a large number of our clients still use us to collect payments on their behalf using their own SUN – the choice is yours.

Find out more by getting in touch here or contacting us on 01908 422026.

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