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Direct Debit Blog

Information for companies considering using Direct Debit and Paperless Online Direct Debits as a payment option for their customers.

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The framework to move Direct Debits from one bank account to another has been around for many years as the concept of switching bank accounts is certainly not a new one. Historically, moving your current account was a little hit and miss, occasionally a direct debit wouldn't move over and you would have to contact all of the people who make payments into your current account individually to ask them to change their records.

The Payments Council introduced a new "Current Account Switching Service" (CASS) in September 2013 to help introduce more competition into the market. The service had two main distinctions from the previous way of switching accounts:

  • The service has a guarantee - if anything goes wrong with the switching of the account the new bank would reimburse the customer the amount of any fees or charges as a result of the error and work with any third parties to correct the problem.
  • Any debits or credits sent to the old account would be automatically redirected to the new account for a period of 13 months (now 36 months).

Budget 2015 - How does it affect you?

Posted by on in Direct Debits

Chancellor of the Exchequer, George Osborne, delivered his hotly anticipated annual budget earlier this week.  As with all budgets, there are winners and losers, so we thought we'd look at some of the key points arising from the Chancellor's speech:

 
For Individuals 
  • The tax-free personal allowance will rise to £10,600 in April 2015, £10,800 in April 2016 and £11,000 in 2017.  For a basic rate tax payer, this means an extra £10 per month in their pay packet this April.  
  • A planned fuel duty increase in September has now been cancelled.
  • The annual tax return is to be abolished in favour of an online "digital tax account". 
  • Farmers will be able to average income over 5 years to help reduce tax.
  • Tightening up on inheritance tax avoidance by using deeds of variation.
  • A help to buy ISA where the Government will top up deposits by 25% at the end of the savings term (maximum of £200 invested each month, maximum top up from the Government being £3,000).  
  • A personal savings tax allowance of £1,000.
  • The pension lifetime allowance is to be cut from £1.25m to £1m, and then index linked from 2018.
  • 1p off a pint of beer, 2% cut in cider and whiskey duty and wine duty has been frozen.
Tagged in: Business News

60% of SMEs Experience Late Payments

Posted by on in Direct Debits

A recent report from BACS (the UKs Clearing House) has said that UK businesses are owed £46.1 billion in late payments.

SMEs who employ up to 250 people have the lion's share of the debt at £39.4 billion with a huge 60% of SMEs experiencing late payments.

This is costing businesses a huge amount of money, not just the fact that cash-flow is affected due to the late payment but there are very often large costs associated with chasing the debt too, thereby reducing profitability.

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New PAYM Mobile Payment Service

Posted by on in Direct Debits

PAYM is the new mobile payments service that will be launched on 29th April 2014 and will immediately be available to 30m people. The service, driven by the Payments Council is supported by most of the major banks though a few have delayed launch until later in the year.

The idea of the service is to allow you to make payments to other people or businesses direct from your phone without needing to know their bank details.

To receive money in this way, users need to attach a mobile number to their bank account, through a registration process with their bank.

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Here at Eazy Collect, we've been extolling the virtues of Direct Debit for over a decade, and now it seems that even the DVLA are beginning to see why Direct Debit is such an efficient payment method.

Car tax discs have been around since 1921, but with the DVLA holding a database of vehicle registration numbers and tax disc payments, the need for the humble piece of paper sticky taped to the windscreen is coming to an end. Paying for car tax, or more correctly, Vehicle Excise Duty, is also due for an overhaul with the option to pay by monthly Direct Debit being added alongside Annual and 6 Monthly options.

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It's Not Difficult To Take Direct Debits

Posted by on in Direct Debits

Often, companies are put-off a Direct Debit scheme to take payment collections from customers as they fear it's difficult to setup and then equally complex to migrate customers. Whilst gaining approval from your bank to take direct debits may prove challenging as you'll need to have a strong trading history and very healthy financial figures, a much simpler alternative is available.

Whatever route you choose, you'll need to obtain a SUN (Service User Number) to enable you to handle payments.  This can either be obtained via your bank, subject to the above stringent requirements, or you can obtain one from a BACS approved Bureau like Eazy Collect Services.

Using a BACS Approved Bureau, will help you avoid complex application processes with the bank (though there's still some rules) and avoid having to pay for any BACS software and maintenance; avoid having to worry about the security risks; and avoid having to think about compliance at every turn.

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PM Cracks Down on Late Payments

Posted by on in Direct Debits

David Cameron pledged today to crack down on late payments.

The PM said he would take action against late payments, which in some cases can lead to staff not being paid and even drive SMEs out of business. He plans to announce a consultation on tackling late payment and whether there is a case for further legislation or penalties.

“It’s not right that suppliers are not getting paid on time for the work they do and the services they provide, and I know that late payment can have devastating effects on our small and medium-sized businesses.” he said
 
If you collect regular payments from customers, you could wait for legislation or take matters into your own hands today with direct debit.

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SMEs’ attitudes to payment methods

Posted by on in Direct Debits

 

A recent study by Bacs, interviewing 500 small to medium sized businesses found that electronic payments are now become the favoured way to pay with a 75% increase in companies now using online banking.

Direct Debit was cited as a preferred payment method with 60% of SMEs seeing direct debit as the preferred way of collecting money and ensuring it arrives on time.

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Direct Debit Management is Easy...

Posted by on in Direct Debits

Direct Debit has been around for a long time and over the last 10 years, the father of electronic payments has seen a surge in uptake as utility companies, gyms, membership organisations and even charities take advantage of the benefits it has to offer.  Those who start using the Direct Debit Service generally see improvements in the reconciliation of accounts, non-payments and overall cashflow.  The hands-off nature of the payments means that customers, members and donors don't feel the impact of payments meaning you received your money quickly, on time and automatically.

So what happens when you submit a payment through our Direct Debit Management Portal - Eazy Customer Manager?  The process is pretty simple:

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The new consumer watchdog for the banking sector, the Financial Conduct Authority (FCA) has reached an agreement with seven of the UK's largest banks and building societies which will undoubtedly help consumers avoid bank charges from failed direct debits.
 
In the unprecedented move, Barclays, The Co-operative, HSBC, Nationwide, RBS Group, Santander and National Australia Group will begin a process whereby direct debits, Standing Orders and future dated bill payments will be retried later in the day if they initially fail due to lack of funds.  Lloyd's Banking Group advised that they already operate a similar system for most payments, and are working to extend the scheme to all transactions.
 
The FCA have pressed for the retry-later process following the introduction of the Faster Payments system whereby payments between accounts happen in near real time.  
 
Historically payments into accounts occurred shortly after midnight as part of a batch process followed by direct debits and Standing Orders.  As Faster Payments can be credited to an account at any point in the day, it is possible that an expected payment into the account is applied after the automated payments out have been processed.  The introduction of the new retry process ensures that payments received later in the day are taken into account when making the decision whether or not to honour automated payments out of the account.
 
For a Direct Debit Originator, those that have their own Service User Number, this is great news as there should be an increased number of successful payments as payments received later in the day are accounted for in the decision whether to pay a direct debit or not.  It is, however, unclear at this point whether or not ARUDD (unpaid) reports will be supplied at a later date to Direct Debit Originators for those payments that fail a second time after being subjected to the retrying process.
 
The FCA and Payments Council are continuing to work in close co-operation to help put together a minumum service standards framework across all banks and building societies that offer direct debits, Standing Orders and future dated payments to consumers.  
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