How to reduce dishonours & increase payment success with direct debit

Here are the reasons why a customer’s payment can fail on a recurring Direct Debit solution, and what you can do to guarantee it goes through

5 min read

When you’re in business, you will always want to make the best use of your time. You may focus on marketing, customer acquisition and delivery, and don’t want to spend any extra time worrying about payments. You may rely on direct debit as the way to go and understand its core value, but what happens if something goes wrong? What should you do if you get a failed payment notification, and how can you guarantee payment success with this approach?

Dealing with dishonours

When you set up a direct debit payment solution for your business, you should receive payment for your products or services without any additional effort and without the need to chase late payments. It’s a 'set and forget it' solution and one less thing to worry about for you. Yet, you may occasionally get a failed direct debit payment known in the industry as a 'dishonour'. It is relatively rare, but it does happen, and it can have a flow on effect on your business cash flow.

Reasons for direct debit failure

Occasionally, a direct debit payment will fail, and this can happen for several reasons:

  • There are insufficient funds in your customer’s account

  • Your customer has closed their account

  • Your customer's BSB or account details are incorrect

  • Your customer's credit/debit card has expired

  • Your customer has reported their credit/debit card as lost or stolen, and their financial institution has not honoured the payment

More often than not, a direct debit dishonour can be traced back to insufficient funds in the account at the moment of processing. This is frequently the case, where the instruction links to an everyday bank account, where funds flow in and out regularly, and the balance changes. For various reasons, the customer may not maintain an adequate buffer and may not have sufficient funds in the account at that time.

Read More: How does Direct Debit work?

Our approach

When you work with Ezidebit, we will help you avoid this type of situation.

1. We can set up payment reminders via email or SMS message, alerting the customer to any upcoming direct debit transaction. This reminder may be enough to trigger action and ensure an adequate amount of funds in the account before the key date. You can set up this feature as soon as you initiate a new direct debit payment schedule so the reminder goes out to the customer just before every payment date. Switch this feature on and off as needed simply by contacting the support team ahead of time.

2. If you still receive a failed payment notification, we can send a message to the customer automatically, and without any delay. The alert will tell them that the payment has been dishonoured and give them instructions to help them make the payment. We will automatically activate this feature whenever you set up a new instruction, just in case.


Read More: See how our service helped a local property maintenance company be flexible when it came to their franchisees direct debit payment schedules.

Other options

Don't forget that you can set up a direct debit payment schedule against a credit or debit card account, as well as a bank account. This may give you and your customers some additional options when negotiating new payment methods.

Download your quick guide to Direct Debit

Helping you

Since it was founded in 1998, Ezidebit has since become a staple in the Australian and New Zealand markets. More than 27,000 businesses and over half a million consumers trust Ezidebit to process their payments.

We take the complexity out of payments, to make life easier for our clients. It is important to us that there are no hidden fees or complicated systems - we give upfront access to pricing, product and process.

We provide a one-stop-shop approach to reporting, reconciliation and transaction data, and have full local support to help our clients and their customers understand the payments processes, giving them control and visibility.

Contact us to find out how we can help you streamline your payments processes and improve your cash flow.

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