The debit system is still an extremely popular method of payment. Find out what you have to take into consideration when offering this payment method.
A direct debit is a payment transaction for cashless payments. Payment by direct debit is a very popular method of payment in online shopping, especially for subscriptions and payments in installments, although it is also very common for customers to use this method even when making one-time purchases.
The payee triggers the payment process, or pull payment, by debiting the account of the respective debtor with a sum to be paid. Their amount is determined by the payee. The equivalent to direct debit is the push payment initiated by the debtor who is liable for the payment. There are three instances involved in the direct debit payment process: the respective creditor as the payee, his bank as the first collection agency, and the debtor. The debit of a bank account is generally referred to as debit.
Three types of direct debit exist. The debit procedure is one of the much less common payment transactions. Here, the debtor authorizes his account-holding paying agent to set up a direct debit on predefined days and thus to transfer money from the debtor's account to that of the payee. Direct debit authorization procedure is the second type of direct debit. The payee is authorized in writing by the debtor to collect a certain amount from the debtor’s checking account by direct debit. The third form of direct debit is the SEPA direct debit. This type of direct debit can only be issued in writing (no longer by phone) via the Internet or in person. Alternatively, in the United States, the Automated Clearing House network processes direct debit.
Direct debit payments offer both retailers and customers diverse advantages in payment. One major advantage is the comparably low fees that are charged for payment by direct debit. The money is removed from the debit account without delay and the retailer receives the payment very quickly. This speeds up the payment processing as well as the dispatchment of the order. Another noteworthy advantage of direct debit payment is how efficient it is for subscription- and installment-based payments. For the customer, paying is easy and quick, as they must only enter their debit information once, and the payment is automatically taken from their account every month. The customer does not have to do anything beyond the first month - and the retailer retains a customer through easy and automatic monthly payments.
SCAN4FIN compared seven direct payment providers.
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