5 min read
5 Common Direct Debit Myths
Direct debit is one of the most popular and fast growing online payment solutions available today, and is quickly developing a strong foothold in the Australian market.
According to the Australian Payments Clearing Association, 2.4 million direct debit payments were made in Australia on an average day in 2013. That is a significant increase over the last decade – in 2003, the comparative number was just 1.3 million.
Removing any barriers your customers have about direct debit is critical to helping you achieve your goal of better cash flow. Misconceptions about direct debit can arise from days-gone-by lock in contracts and in-flexible terms. The truth is, direct debit provides both you and your customer the flexibility of automated payments with varying amounts and frequency. Ezidebit customers know this and are already talking with their customers to help them understand the benefits of direct debit.
The rise of non-cash payments in Australia is prolific, and direct debit is a core part of that growth. Clearly, Australian consumers are excited about direct debit and the potential convenience and security benefits this platform can offer. However, some misconceptions about direct debit still exist among a number of local businesses.
Here are five common myths of direct debit that you should read up on if you are still unsure about the advantages of this payment method.
Myth: Direct debit is unsafe
Considering the increasing scope and sophistication of modern cyber security threats, it’s understandable that many businesses are concerned about the security and safety of their payment processing options.
However, direct debit is actually a highly secure and reliable payment platform, particularly when you use a direct debit software provider that is fully PCI Compliant.
Myth: Direct debit requires a lot of paper work and manual processing
In the past, direct debit has drawn some negativity due to its reliance on paper forms and manual processes. However, modern paperless direct debit solutions are extremely streamlined and automated, with consumers able to quickly and easily input their details online.
From there, customer payments automatically begin on a pre-selected date, with minimal input from the consumer or the business. As a result, both parties are able to save time and improve productivity – an optimal outcome for all involved.
Related content: Download our Cash Flow Playbook to learn even more ways to improve your business cash flow.
Myth: Consumers don’t like signing a direct debit agreement
Some businesses believe consumers will be unwilling to sign into a direct debit agreement, as doing so requires them to commit to regular ongoing payments that are processed without their input.
However, the consumer always remains in control and can cancel their direct debit with a business easily. It is important to remember the power of direct debit is the control if affords the business-consumer relationship. Direct debit saves them time and offers customers peace of mind when it comes to making time-sensitive payments. Direct debit also mitigates incidents of bill shock – unexpected and excessive bills that are often incurred due to late payments, and can lead to weakened customer relationships and increased customer churn.
Myth: Direct debit is rigid and inflexible
Direct debit payment solutions don’t need to be excessively rigid and inflexible – a good direct debit payment platform should cater for adjustments of payment terms throughout the life of the contract. This means you are free to work with your customers to identify a payment schedule that suits you both. This will let you focus on recurring relationships, not managing recurring transactions.
The Ezidebit direct debit platforms available that cater for varying payment set-ups, and can also be used to coordinate BPay payments, giving your customers greater freedom of choice regarding how they pay their bills.
Myth: My business needs to invest in expensive software to offer direct debit
A direct debit solution tailored to the needs of your business can be extremely affordable and easy to integrate – particularly if it is a cloud-based solution. It is important to consider the opportunity cost of not offering direct debit – inconsistent cash flow and reduced customer satisfaction.
After you have rolled out direct debit in your business, review your payment methods and volumes to see how many of your customers are taking advantage of automated payments, and how many you are still processing manually each period. You can calculate the impact of increasing the per cent of your customers on direct debit here with our simple cash flow calculator.
Related content: Try our Cash Flow Calculator to see how much you could be saving.