Direct Debit: How Does It Stack Up To Other Payment Solutions?
If you are looking for a way to make your payment collection easier and more efficient, switching to direct debit payments might be just what the doctor ordered.
To help you decide if this is the right move for you, we will first take a look at the benefits of direct debit payments, before comparing it to the other solutions available.
What Is a Direct Debit Payment Gateway?
A direct debit payment gateway allows you to securely and automatically collect your customers’ bank details. You can then use that information to take money directly from their bank account to pay for products or services (once it has been setup, of course).
Customers are notified when payments are taking place. However, they don’t have to do anything on their end to make the payment happen (such as typing in their debit card details).
Benefits of Direct Debit for Small Business
All kinds of businesses can use direct debit payments, from brick and mortar businesses like gyms to e-commerce businesses. Here are some specific reasons why you might want to consider setting up a direct debit payment gateway:
More Security
Accepting direct debit payments is one of the best options for businesses that take security seriously.
The best direct debit payment gateway will offer robust security features to keep your business’s data and your clients’ or customers’ data safe.
For example, PayChoice offers Tier 1 PCI DSS Security. This level of security reduces your risk of dealing with the expenses brought on by a data breach.
Lower Fees
Direct debit payment gateways come with much lower fees compared to a lot of other payment processing options and payment solutions.
This is especially true of PayChoice. It boasts some of the lowest processing fees on the market — while also offering a whole host of payment processing services.
Direct debit payment gateways come with much lower fees compared to a lot of other payment processing options and payment solutions.
Faster Payments
Accepting direct debit payments allows your business to get paid faster, too.
Are you tired of waiting for invoices to get paid or for cheques to get cashed? If so, direct debit is the way to go.
Because direct debit payments are collected straight from the client or customer’s bank account, there is a lot less stress to deal with. You don’t have to send awkwardly worded follow-up emails, nor do you have to deal with the hassle of hitting clients and customers with late fees.
Improved Cash Flow
As a business owner, you know how important it is to avoid cash flow problems. You also know how easy it is to fall behind when you’re not getting paid on time.
This is another reason why direct debit payments are so beneficial to your company.
Because it’s easier for you to get paid on time, you don’t have to worry about cash flow interruptions. It relieves a lot of stress for you and your accounting team and ensures you always have enough money to keep the lights on.
Improved Visibility
Direct debit payments assist with transparency and financial visibility, too.
It’s a lot easier to keep track of your business’s cash status with a direct debit payment gateway. This frees you up from having to worry about how much money is coming in (and when it’s coming).
Direct debit payments also allow for more transparency for your customers. It lets them know how much money is coming out of their bank account and when it’ll be taken out, which helps them to prepare and budget properly.
Increased Customer Loyalty
Accepting direct debit payments can improve your customer loyalty and customer retention rates.
Direct debits make it easy for your customers and clients to consistently pay for your products or services. This increases the likelihood that they’ll continue working with you long-term.
Increased Flexibility
Your customers and clients will also appreciate the increased flexibility direct debit payments provide for them.
With direct debit payments, they can choose the day that their payments are taken from their bank account. This lets them enjoy more control over their budgets, ensure they can always make payments on time, and avoid annoying late fees.
Compared to a direct debit, credit card payments come with higher processing fees for the merchant.
Other Common Payment Solutions
Are you still on the fence about accepting direct debit payments? Before you decide to write it off, consider how it stacks up against these other common payment solutions:
Cash
Cash is tangible and doesn’t come with any extra fees. However, keeping a lot of cash on hand makes your business vulnerable to robberies. Furthermore, if you run a digitally based business, accepting cash isn’t an option at all.
Credit Cards
Lots of businesses — both brick and mortar and e-commerce businesses — accept credit card payments.
This option is certainly convenient for a lot of customers. However, the main problem with it compared to a direct debit payment is that it comes with higher processing fees for the merchant.
To offset these fees, you’ll either have to charge your customers more — which they likely won’t appreciate — or you’ll have to eat the costs yourself.
Want to accept credit card payments? Check out our service here.
Internet Payments
If you run an online business, you might consider accepting internet payments using platforms like PayPal or Stripe.
These options are convenient, but they can also come with high fees — some are even higher than those from a credit card processor. Direct debits are much more cost-effective in comparison.
Pro Tip — if you DO need to take internet payments, check out our Australian payment gateway. Not only do we offer the lowest fees, it’s faster, safer and you get same-day customer support.
Cheques
Some businesses still allow customers to write cheques. The problem with this option (aside from the obvious, that it’s very outdated) is that cheques have the potential to be rejected by your bank when you go to cash them (this is known as a bounced check). This can result in unexpected fees and affect your bottom line.
Direct debit payments are collected straight from the client or customer’s bank account, there is a lot less stress to deal with.
Are Direct Debit Solutions Right for You?
Now that you know more about the benefits of direct debit and how it stacks up against other payment solutions, what do you think? Is a direct debit payment gateway the right choice for your business?
If you’re ready to move forward with a direct debit gateway, PayChoice is here for you.
More than 3,000 Australian businesses use PayChoice to accept various payment methods, convert more customers, and streamline their payment process. Sign up today to chat with our team and learn more.