Direct debit is basically a transaction that involves having the payer instructing their bank to debit their account and deposit the amount to a given account belonging to a company as a form of payment for a service. Direct payment has been hailed as having a lot of benefits for both businesses and customers. Businesses that benefit most from this automated payment include insurance and mobile phone service companies. Others are television/broadband providers and banks of course. But, few people pause to wonder how much the direct debit service providers charge them for the convenience they offer. Here is a breakdown of how much you are likely to pay for direct debit services:
To begin with, a business usually has three options available for using the direct debit scheme. These include through a bank, a Gocardless or direct debit bureau. Each business can choose according to its size and its requirements. A direct access is most suitable for large companies that want to manage direct debit collection internally. This way, the company submits directly into the direct debit system. The main advantage of using this route is that the business will spend relatively low transaction fees as compared to other methods.
The downside is that the system is complex and it requires substantial resource to operate it since it needs about three employees to oversee it. The business must first apply to its bank before it becomes a certified direct submitter and issued with a service user number. The bank will grant permission if the business proves that it has a solid financial standing and efficient administration that will meet the direct debit scheme regulations. Once the business has met all the requirements and has been issued with a BACs certified software, it will end up spending about £15000 yearly.
Alternatively, if a company does not wish to go to all the trouble of submitting directly, they may opt to submit indirectly. This can happen through outsourcing to a commercial company that deals with such services. These may include Direct Debit bureau and GoCardless companies. These companies may either use the bureau’s SUN or their own SUN. Eazypay is one such company that can submit the payments on behalf of your company. A direct debit bureau may charge your company setup fee of between £400 and £800, a minimum monthly fee of £30, and transaction charges of between £0.20 and £0.50. Additionally, you will be charged £5 for every submission, £1 for each mandate as well as penalties for unpaid payments.
GoCardless can also be an ideal option for your business because is easy and cheap. It only charges a transaction fee of 1%. It is an online specialist that carries out all direct debit operations on your behalf. Moreover, customers also have to pay £36 for mobile phone services, £40 for television/broadband services, £ 23 for home insurance and £ 38 for car insurance.