Direct Debit refers to the payment system whereby the payee (the individual who draws funds) can instruct his bank to collect or debit an amount of money from the account of the payer’s account. This request is submitted pending authorisation for the transaction to be made.
Direct Debit has grown to become a very popular means of conducting business due to its reliability, convenience, and ease of use. It is also technologically sound, and it is unlikely that any payment method will eclipse it in the future.
The reasons why direct debit services are the future of payment technology include;
- It eases the hassles of payment
Chasing invoices sent to individuals or organisations who owe you money is now a thing of the past. The same can be said for receiving a majority of payments via phone or cheques. The numbers of payments received through these channels are now vastly reduced and easily manageable. Moreover, one can easily open several Bacs Direct debits where he/she can easily manage the entire payment process effortlessly.
- Businesses have already Grown Accustomed to it
Given that a large majority of businesses already use direct debit to make most of their payments, it is only natural that they seek various services in the market that expect them to pay using this method as well. Most customers pay up to five organisations using this method and any business or service provider who does not embrace this will be putting his/her future in jeopardy. In fact, most businesses have already embraced Direct Debit services as their payment system.
- It Eliminates Late Payments
Individuals who are required to pay a given amount of money daily, weekly or monthly often fall prey to forgetfulness. This can greatly harm a business that is heavily dependent on these payments. With direct debit, the payment process is automatic and takes place whether or not you remember that a payment is supposed to be made. The customers also experience the benefit of not being liable to penalties for either forgetting to make a payment or making the payment late. In this scenario, every party wins.
- This System is Protected by the Direct Debit Guarantee
Businesses that use direct debit are protected by the direct debit guarantee which guards them against fraudulent acts and any errors made in payment. This makes it not only the safest payment method but also the best regulated. The modern firewalls and multiple encryptions employed by banks also guarantee that customer information will never be lost or tampered with. They are a testament to the fact that banks are doing all they can to ensure that your funds are safe.
- Better Cash Flow
All businesses that use direct debit when engaging with their customers have the benefit of increased cash flow. This means they can easily know how much they are going to be paid by what time of the month and in what frequency. This enables them to easily make short-term and long-term forecasts as well as make solid plans.
- Better for the Environment
Direct debit services are completely paperless. It eliminates the need for any paperwork and consequently helps to conserve the environment. Given the millions of people who use direct debit, this system has successfully avoided using paper meant for cheques, receipts, bank slips among others. This is a feature that is consistent with a payment system that will headline the future of payment technology.
- Customer Loyalty
Customer loyalty is a phenomenon that naturally takes place when customers are provided with a service that has proven itself to be loyal, efficient, simple to understand and safe. Direct debit possesses all these qualities which have enabled many businesses to retain their customers for the long haul.
- It Spreads the Cost
One advantage of direct debit is that a customer can make several agreements with different payees (businesses) regarding the best time in which they will be comfortable to pay the money. This will enable him to spread his costs as he deems necessary. The benefit of this is that there will not be one moment when he will be overwhelmed or surprised. Businesses, in turn, experience the luxury of timely payments and loyal customers.
If you haven’t already done so, take action and implement a direct debit service into your business.