Banks and other financial institutions are regularly coming up with easier methods of receiving as well as making payments on bills. First the evolvement of paper checks and then use of plastic money like credit and debit cards, and ATM cards brought a total revolution in the financial market. And the latest one was electronic transfer of funds, which made it even more convenient for the users. But each and every method had its own pros and cons, and the common disadvantage associated with all of them was the fees charged for each and every transaction. It became important to get rid of all these charges and find such a way that just charged a nominal fee from the payers, and this leaded to the invention of Direct Debits.
Direct Debits is probably the easiest and the most innovative way of withdrawing payment directly from the bank account of payer and depositing it in your account with the consent of the payer. The need of using paper checks is eliminated, thus making it an eco-friendly option. This method is best used to make and receive payments of recurring nature. Once the payer gives a written permission regarding the payments, you can be assured that the decided amount will be transferred to your account on the pre-determined date. You can also use this platform to encourage your customers in buying your products through e-commerce and also making payment. All the charges that were being laid to use the merchant banking services will be eliminated, thus reducing a large amount of your monthly expenses.
The banks are linked in Direct Debits and ACH (Automated Clearing House) network is used to transfer the funds from the account of payee to the payer. Regular business accounts i.e. current accounts are generally used to carry on the process of transactions in this system. The fee is very nominal and is a flat rate, not altering depending on the size of the transaction. Every transaction would be charged.
The only drawback associated with Direct Debits is you will not get the information immediately if the account of payer holds enough balance to clear your payment or not. It might take a time of about 24 hours to get the exact information. Apart from this issue, the process only has loads of advantages attached with it and makes life easier for people located in different places and doing business.
Reduce the Processing Costs of Payments with Direct Debits