Benefits of Direct Debits

Benefits of Direct Debits to Payers

There are many advantages of using Direct Debit and the benefits are enjoyed by all parties involved in the transaction. Let’s take a closer look at those benefits and also consider some of the ways in which Service Users can encourage adoption by customers.

There are a number of reasons why it makes sense to introduce Direct Debit payment options for your customers. A key one is that people like paying by Direct Debit. Approximately 75% of the UK’s population have a Direct Debit Instruction (DDI) set up on their bank account and on average people have five DDIs or more set up. Many people already understand the advantages of Direct Debit payments.

The following are some of the benefits of Direct Debits for customers:

Box Icon Payment plans: better budgeting

Payment plans: better budgeting

Box Icon Peace of mind: never miss a payment

Peace of mind: never miss a payment

Box Icon Convenient and saves time

Convenient and saves time

Box Icon Often accompanied by an incentive

Often accompanied by an incentive

Box Icon Direct Debits are portable

Direct Debits are portable

Box Icon Safeguarded by a Guarantee

Safeguarded by a Guarantee

Benefits to Service Users

As well as being a hugely preferred and positive payment method for customers, Direct Debits offer a number of benefits for Service Users, including:

Box Icon Cheaper than Cheques, Safer than Cash

Cheaper than Cheques, Safer than Cash

Box Icon You control the collection date

You control the collection date

Box Icon Variable amounts and dates

Variable amounts and dates

Box Icon Eliminates time consuming reconciliation

Eliminates time consuming reconciliation

Box Icon Improve member/ customer sign-up

Improve member/ customer sign-up

Box Icon Improve member/ customer retention

Improve member/ customer retention

Promoting Direct Debits

Paying by Direct Debit offers benefits for both the Payer and the collecting organisation, so here are a few simple ideas to help promote the advantages of Direct Debit to your Payers.

1. Offer flexibility of payment date

Your Payers will be much more likely to pay you by Direct Debit if you give them enough options on dates or times that suit them. Everybody has a different preference and most people prefer to have their Direct Debits go out just after they themselves have been paid.

2. Training

Ensure you and your team are fully trained and up to date. Training by an accredited Direct Debit expert, such as Clear Direct Debit, will help you to reduce the number of unpaid items, improve the customer experience and reduce indemnity claims. If you are working hard to get more people signed up, then it makes sense to ensure you also keep them!

3. Make it easy

Are you taking full advantage of all the paperless channels to get more Direct Debit customers? Paperless Direct Debit can vastly improve the number of sign-ups, especially with a multi-channel approach, and it needn’t be difficult to set up. We can help you implement new paperless Direct Debit channels and stay ahead of the competition.

4. Additional time to pay

Business-to-business environments are often looking to reduce debtor days and the good news is that Direct Debit customers pay on time and don’t need chasing. You could reward people for choosing to pay by Direct Debit by offering them improved payment terms. You still get the benefit of being in control.

5. Discounts and/or incentives

Finally, reward people for signing up to pay by Direct Debit! You’ll find some ideas below.

Discounting Direct Debits

In most cases collecting by Direct Debit will be significantly cheaper for you to administer and will offer you much-improved cash flow, so pass on those savings to your customers or members!

1. Straightforward discount

This is a favourite of telecoms and energy companies who are not only keen to get new customers on board in the most cost-effective way but also are at constant risk of people switching service suppliers. They favour providing a discount that is ongoing, as attracting new customers is always more expensive than creating loyalty amongst their existing ones. Advantages of payment discounts include being easy to understand, offering a good deal for customers, and incentivising loyalty.

2. Discount the initial period

If signing up new customers is the main aim and you are likely to be able to create loyalty in other ways, then why keep giving the discount away every month or year? Publications often offer the first few copies free if you sign up to a 12-month Direct Debit subscription. Your local gym will often give you the initial month free if you sign up for a year’s membership. Advantages include being easy to understand, the word “FREE” is always a powerful marketing tool, and longer-term margins are not affected.

Incentivising Direct Debits

It’s not just discounts that will incentivise customers, there are other approaches that you can take, too. Consider the following:


1. A free gift

Cuddly toy! Is there something you can offer that doesn’t cost you the earth but has real appeal or value to your customer base? It would be a bit odd for a charity to offer a discount; however, those of us that have a soft spot for an animal charity may find that cuddly lion cub, baby elephant or fluffy dolphin too much to resist. Advantages include that it may be more ethical or attractive than a financial incentive, and subtly branded goods can also be useful as a constant reminder – as a certain popular market comparison brand has shown in recent years!


2. Prize draws

The hook for Council Taxpayers in Greater London recently was the potential of £25,000 in prize money. If you have a big enough customer base or a captive audience this might be a low-cost initiative with a decent-size prize. Again, it doesn’t have to be a one-off, you could have a regular draw for all of your Direct Debit payers and shout about the winners in your newsletters and on your website. Advantages include that there is only one prize to give away, it’s easy to administer, and it can generate additional publicity.

Overall, there are many advantages of Direct Debit payments to both consumers and collecting organisations. To discuss the advantages of Direct Debit and explore how you can use the system to your advantage, contact Clear Direct Debit today.

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