Online Direct Debits- A Superb Option Available For Recurring Payments

What are Direct Debits?

Direct Debits offer safe and convenient ways to make regular payments. A direct debit is a financial transaction in which an individual withdraws funds from another individual’s bank account. The payee instructs his bank to collect an amount directly from the payer’s bank. This will happen provided the buyer must have advised his bank that he has authorized the payee to directly draw the funds. Once they’re set up, the direct debits take place automatically. Direct debit transactions proceed electronically. The Direct Debits are ideal for making recurring payments like utility bills or credit card bills that can vary from month to month. Direct debits can also be used for making irregular payments. They can be used for mail order transactions or even at a point of sale. At any point of time, the buyer can cancel the authorization for a direct debit, enabling the bank to decline the transaction.

How Direct Debits make paying bills easier?

Direct debits offer numerous benefits to the user. Many companies offer discounts for monthly Direct Debit payments. Direct Debits offer a safe and speedy way of making payment. The user is not required to remember bill due dates and is saved from the trouble of calling into a bank or finding post boxes. This helps save valuable time of the payer. The user can make payment on a suitable date. Organizations using the Direct Debit facilities are closely monitored by the banking industry which offers safety and protection to the user. In case of errors on the part of the company, the user gets a full and immediate refund.

How it differs from Direct Deposit and Standing Order instruction

A direct debit differs from a direct deposit or a standing order. While a standing order involves periodic payment of fixed amounts, a direct deposit can be of any amount and can be periodic.

How Direct Debit Instruction works?

A direct debit instruction must be supported by some kind of authorization for the payee to draw funds from the payer’s account. There are two methods for setting up the authorization. The first method involves only the payer and the payee. The payer authorizes the payee to collect due amounts from his account. In case, the buyer instructs his bank to return any direct debit note, the payee has to pay all fees for the transaction. If this happens too often, he may lose his ability to initiate direct debits. In the second method, the payer instructs his bank to honor direct debit notes from the payee. This is followed by the payee getting notified that he is now authorized to initiate direct debit transfers from the payer. Though this offers a more secure way, the buyer will find it difficult to return debit notes in the case of an error.

Where is Direct Debit available?

The United Kingdom, South Africa, Brazil, Spain, Germany, the Netherlands and Switzerland – are the countries where Direct Debit facilities are available.