Payment Processing Blog

'Digital by Default' is a cross-department Public-Sector project aimed at cutting costs without impacting on service delivery.

As a main event Sponsor, Eazy Collect Services Ltd demonstrated how outsourcing direct debit payment processing could make a large savings contribution for a variety of Public Sector departments.

According to the Directgov 2010 and Beyond report, the introduction of digital services will streamline business processes across many departments across the UK. It will make services more efficient and has the potential to save £1.3bn whilst improving the services to citizens.

For further information, visit www.eazycollect.co.uk

Here's an added incentive for businesses who think they may benefit from taking direct debit payments from their customers.

If you take regular payments from customers, using direct debit can make a massive improvement to your cash flow as the proportion of your payments arriving on time will significantly increase over those companies relying on cheques, cash, standing order and card payments.

And, if you decide to switch to direct debit with Eazy Collect during October 2011, you'll not pay any transaction fees until January 2012.

See our Direct Debit Set Up page for further information

If you're a business that collects regular payments from your customers, then you could be missing a trick if you're not using direct debits to collect payments.

A few stats below may give you some comfort:

• 87% of Direct Debit users cite that it is a convenient way to pay bills
• 79% believe that Direct Debit is a hassle-free payment method
• 82% of Direct Debit users believe they save you time
• 84% believe that Direct Debit is a safe and reliable way to make bills
• 73% of Direct Debit users say that they can help to make your life easier
• 65% believe that using Direct Debit saves them money

Data Source: Bacs Family Finance Tracker 2010 (January-June)

So it may not be as difficult as you think to migrate customer payments over to direct debit.  A few propositions could be for example:

• Promoting a choice of payment dates to coincide as much as possible when your customer has available funds in their account
• Promoting more frequent Direct Debit collections e.g.weekly or fortnightly, to fit in with the budget cycle for those paid more regularly
• Offering appropriate advance notice for the collection frequency, and generally offering as much notice as possible and in as visible a manner as possible
• Offering additional or irregular Direct Debit collections if appropriate for the product/service being offered

And, most importantly, there are a whole host of benefits for your business too:

• Average 98% Payment Success Rate
• Consistently Get Paid On Time
• Amend your pricing without the need for additional paperwork
• Minimal Administration with a user-friendly, web-based interface
• Set payments up either face to face, over the phone, or via the web

Eazy Collect is a BACS Approved Bureau who can help you get the most from direct debit processing.

Ensure your advance notice letters are Scheme compliant and the formats being used have been approved by your sponsor bank or, if you use an outsourced BACS Approved Bureau, such as Eazy Collect, they will handle this for you.

The bank account holder must receive an advance notice when:

• Signing up to pay by Direct Debit,
• Changes are made to the amount previously advised, or
• Changes are made to the Due Date previously advised.

The Advance Notice allows payers to budget for the collections and question a collection before it is debited from their account.
The notice period for advance notice is most commonly 10 working days plus postal time (if applicable).

The Advance Notice must include:

• Service user contact details
• Collection Amount(s)
• Collection Dates(s)
• Direct Debit Reference Number
• Service User Number (SUN)

The most common method for providing advance notice is in letter format, though many sysems can use email if you have your customer's information.

An invoice, statement or payment schedule format is also acceptable if they include the above advance notice information.

Advance notice letters must not include material that may be deemed as marketing.

On occasions it is necessary to provide customers with verbal advance notice. This is only really recommended where a payer has initiated a collection.

Further advice can be obtained from Eazy Collect on 01242 650052.

Research by BACS (the UK Clearing House) at the end of 2010 found that half of Britain's SMEs were victims of late payment with £24 billion owed, that's an average amount of £27,000.

Coupled with that, a staggering 158 million working hours were lost to chasing overdue payments.

If your business collects regular payments from customers it could pay you to use electronic payment methods such as direct debit.

You could see a much improved cashflow as payments arrive on a set date, so you're not relying on an individual to remember to post your cheque, plus you won't have to wait a further 3-5 days for the cheque to clear before funds become available to use.

Processing electronic payments is much cheaper than cheques, so your bank charges will reflect that accordingly.

You could write to your customers and make them a special offer for signing up to direct debit, knowing you'll be on your way to more reliable payments in the future.

Ask a reputable direct debit provider to see whether direct debit payments would be suited to your business, and it could be that you'll no longer be amongst the 53% of businesses suffering late payment.

Bacs is a not-for-profit organisation and is owned by 15 of the leading banks and building societies from UK and Europe. Bacs’ objectives are to ensure that a quality service for collecting direct debits is provided and that rules and regulations are adhered to by both users, banks and bureaus. Bacs' key responsibilities are to:

• maintain the integrity of the direct debit scheme
• update the scheme rules
• act as an ombudsman/ governing body for the service

Eazy Collect Services Ltd. is a BACS Approved Bureau.

Paperless Direct Debits were introduced in 1998 to remove the paper instruction from the sign-up process enabling improved sales and payment processes for many businesses.

Paperless Direct Debit enables service users to capture payers’ bank details over the telephone, on-line or any other means approved by your sponsor bank and can be used alongside the traditional paper based signup.

The Paperless Direct Debit process is:

1. The bank details are entered into the Direct Debit Management Software (e.g. Finance Application, Customer Management Software)
2. A confirmation letter/email is sent to the payer, advising of the new Direct Debit set-up.
3. The advance notice Letter/Email is sent to the payer, advising of the collection schedule. The advance notice can be combined with the confirmation letter.
4. The Paperless Direct Debit Instruction is lodged at the payer’s bank using AUDDIS.

Due to the additional liability and risk associated with it, Paperless Direct Debit isn’t appropriate for all types of business and client bases. Paperless Direct Debit cannot be used if:

• Two signatures are required
• A paper Direct Debit Instruction is requested by the payer
• Any Paperless Direct Debit Script question is not answered satisfactorily

The Paperless Direct Debit process will require you to make changes to your procedures and systems but will be well worth the effort.

Eazy Collect Services Ltd. is a BACS Approved Bureau
Direct Debit Collections

Direct Debit Collection rates are unparalleled with a collection rate of 98%* during 2010.

Are 98% of your customers paying you on time, or do you find yourself chasing late payments every month and sometimes struggling with cash-flow?

If it's the latter, then using direct debits to collect your customer payments may be the solution.

Using direct debit to collect regular payments has many advantages over cheque, card payments and standing orders:

• Predictable income flow
• Far cheaper than collecting card payments
• No card expiry dates to contend with
• Electronic rather than manual processing
• Failed payments automatically resubmitted
• Amend your prices without needing additional paperwork signed

If you want to know more about whether direct debit is suited to your business and how you go about implementing it in your business, we have an faq's and resources section in our website to help you.  It has a wealth of material and we're on hand if you need to chat live online.

Eazy Collect Services Ltd. are a BACS Approved Direct Debit Bureau.

*Source: BACS Annual Report 2010

Direct Debit is probably the most versatile way of collecting regular customer payments.

To start with, processing any customer payment comes at a cost:

• Bank charges for processing cheques
• Expensive percentage-based transaction charges for handling card payments
• Admin overhead in reconciling Standing Orders
• Late payments causing cash-flow problems

For businesses that collect regular payments, Direct Debit is now the best option bar none.

The recent 2010 Annual Report produced by BACS* showed that direct debit transactions grew by 2.8% in 2010 to 3.8 billion transactions with 72% of adults having at least one direct debit.  In addition the payment rate is unparalleled with a 98% success rate.

If your business would like to receive 98% of payments on time, then taking direct debit payments could help you, since:

• There’s no expiry dates as with card payments
• The banks are desperate to phase cheque payments out as the cost of processing them is expensive
• You could offer your customers payment options
• There’ll be no customer excuses of ‘the cheque's in the post’

*BACS is the UK body owned by Europe’s Leading Banks and charged with the provision of automated payment services and payment clearing.

Eazy Collect Services Ltd. is a BACS Approved Bureau

Accepting credit cards offers a number of benefits to merchants and consumers alike, and can provide a dramatic boost to your sales and cash flow. But that boost can be diluted somewhat if you don't pay attention to the various factors that influence the fees associated with accepting electronic payments.  There are many available options and partners to choose from.

Research into how payments are accepted and processed can literally pay dividends to those merchants wanting to reduce their payment-related expenses:

For a start charges vary wildly, with typical charges for card payments varying between a straight 1.5% and 3.4% plus 20p per transaction depending upon volume.  If taking payment by online direct debit collection is potentially an option, then charges can be anything from 4p to £1.00 per transaction, again depending upon the provider and transaction volume.

1. Don't fall 'special offers' on rates as the small-print could see you paying over-the-odds within a few short weeks.
2. Weigh up the pros and cons of the various providers and beware of 'hidden charges' as they are numerous in certain circumstances.
3. If using card payments, take advice on reducing charge-backs that could see you paying extra fees for cancelled/reversed transactions.

Following these steps and paying careful attention to payment methods, procedures and security requirements will pay considerable dividends in improving your productivity and profitability, and reducing payment related fees.