People often say that living life as a full-grown adult is difficult. Apart from the increasing work demands and constant pressure to become successful, both young and mature adults must also ensure they consistently pay their bills on time.
Utility bills, property taxes and mortgages, credit card loans, and even charges to your internet and cellphone subscriptions are all concrete evidence of transitioning into a responsible and full-fledged member of the society. Failure to pay these bills risks the accumulation of debts and, worse, the denial of access to the necessities mentioned above.
Fortunately, payments can now be made through wireless options, meaning customers can pay their bills using contactless payment, such as in a direct debit system.
A direct debit system is a flexible and hassle-free method of sending or collecting payments for certain services availed by a consumer. Direct debit is favored by most banks, service providers, and customers. It maximizes the growing dependence of people on convenience and technology.
How does direct debit work?
In a nutshell, direct debit involves three parties: The payee, the bank, and the payer. The payee represents the individual or company who draws funds from the bank account provided by the payer. The bank serves as the middleman that enables the exchange of money between the payer and the payee.
The payer (or customer) provides the payee (company or service provider) with their bank account and authorises the latter to collect payments for the services they availed. Authorisation can be done online or by filling out a document and personally submitting all the necessary information to the company receiving the payment. This document is called a Direct Debit Mandate.
Using a direct debit system is highly convenient because payers can set payees to deduct payments on the specified due date of their billing statements. In this way, payers will no longer have to worry about missing payment deadlines, or misplacing their statement of accounts.
Another advantage of direct debit is it promotes transparency in all transactions. Payers can track and confirm payments, while the payee gets the assurance that they get the proper compensation for their products and services. Additionally, it’s the bank’s responsibility to secure the exchange of money and practice utmost confidentiality for the sake of the two parties involved.
Direct debits are flexible, too! It can be used to pay bills, accounts, and subscriptions, as well as make purchases on stores supporting direct withdrawal payments. It saves time and effort on the part of the payers. The convenience that direct debit brings will also reflect positively on the company, merchant, or shop.
Customers no longer need to fall in line or travel to their bank’s nearest branch. They can complete their payments at home—a handy feature, especially during a health crisis, such as COVID-19.
There are several other ways that both organisations and customers can make the most out of a direct debit payment system. The most relevant ones include:
- Offering incentives for customers who opt to use direct debits, such as exclusive gift codes and flexible payment terms
- Encourage donations to charity organisations
- Prevent fraud and increase the payee’s efficiency
- Provide customers with proper documentation on the amount deducted from their bank account
- Guaranteed refund for any amount taken from the payer’s account that was unnecessary or in excess
The use of direct debit is a smart method of managing one’s finances and maintaining a favourable relationship between businesses and the customers that they serve.
Laura Thomas is a farmer of words in the field of creativity. She is an experienced independent content writer with a demonstrated history of working in the writing and editing industry. She is a multi-niche content chef who loves cooking new things.