8th Feb 2017

Making Direct Debit work for you

The Bacs Direct Debit consultation closed on 9th December 2016. Bacs, which has been known to process over 100 million payments in a day, undertook this public consultation to understand the challenges businesses and consumers face now and in the future.

Basically, this presented the opportunity to find out which features are working and what changes could be brought in to enhance the service even further. Also, it was a great opportunity for businesses of all shapes and sizes to get involved and make a difference.

Type of questions asked

The Processing Cycle

  • If you feel speeding up Direct Debit collections would be beneficial to your business, put your argument forward to Bacs explaining your reasoning.
  • For some businesses, the current three-day Direct Debit processing cycle is an ideal timeline. Any changes for them could prove costly, and disrupt their existing payments and collections process.

AccessPay View: The long-standing three-day processing cycle is clearly working for many businesses. Given the regular, predictable nature of payments collected via Direct Debit (e.g. subscriptions and utility bills) it seems unnecessary. We would argue that for Service Users, the Processing Day (Day 2) provides a ‘buffer’ where erroneously submitted collections could be reversed if necessary.

The flexibility of Direct Debit

  • Would your customers be more inclined to make payments through Direct Debit if the service was more flexible in how and when payments could be taken?
  • On the flipside, if you don’t use Direct Debit at the moment, could you be persuaded to make collections using the service, if it became made more flexible in how and when payments could be collected from customers?

AccessPay View: Allowing greater flexibility in defining the payment amounts and the collection dates can only be a good thing for consumers. Some Service Users already allow an online portal for Service Users to manage their Direct Debits. But for many SME’s the cost of doing this is prohibitive. Allowing consumers to amend collections dates and amounts could have severe impacts on cash flow and forecasting for SME’s who rely on the timely clearing of funds.

The Direct Debit Guarantee

  • What is your opinion of the current Direct Debit Guarantee? Do you think it provides your customers adequate protection?
  • Some businesses argue that the current process is flawed, with customers using the Direct Debit Guarantee to cancel payments for services they have already received. If you feel this is a problem that affects your business, then do you think “there should be no Guarantee” at all?

AccessPay View: As there’s no upper limit and expiry date for indemnity claims, there’s little doubt that the Direct Debit Guarantee provides significant protection to consumers. It could be argued this is the main reason for the success of the scheme. However – due to the inherent risk to businesses and their sponsoring banks, smaller businesses and start-ups often cannot gain the sponsorship agreements required to access Direct Debit collections services. If there was a different product, such as a “Direct Debit Guarantee Light” this may open up access to collection services which were previously unavailable to large swathes of the SME market.

Whatever the decision be mindful that changes made to the Direct Debit Scheme will impact your business in the future. We’ll share the findings when the results come in later this year.