Whether you use direct debit for your transactions or not, it is estimated that direct debit has become one of the fastest and easiest ways to pay your utility and electricity bills. It is observed from a recent survey that almost 65% of customers pay their utility and electricity bills by using direct debit transfer. It is also observed that various suppliers are providing discounts also on using the services of direct debit. This means that not only you are paying the exact amount of money, but also receiving great benefits for doing so. You can also use this information any time by referring to the payment, which has been completed via direct debit. The direct debit system can provide you with the best ways on how you can manage easy cash flow by paying through direct debit.
What does it exactly mean?
You might have heard the term quite often, but in this article, you will understand how what exactly does it mean. A direct debit is a kind of pre-authorized payment (PAP) to be made by the banks, as you can authorize them to pay a certain amount from your accounts directly to another bank or company at regular intervals. These kinds of authorized payments are usually essential when there is a need for making payments related to the utility bills at the start of every month or your loan repayments.
Countries that provide Direct debit system
Direct debit is now easily available in various countries, such as UK, USA, Italy, Germany, The Netherlands, Spain, Switzerland etc. However there are different rules and regulations related to the processing of domestic payments through direct debits in the respective countries. However, there are exceptions in the case of SEPA, which stands for Single Euro Payments Area, which provides ease of making payments across the border along with domestic payments with the second exception is present in the United States where the direct debits are usually processed through Automated Clearing House network.
Various forms of Direct Debits
Direct Debits are usually classified in the forms of Collection Authorization and Debiting orders. These types include the party for which the authorization has been granted from the payer themselves. They can be explained further as follows:
- In the case of Direct debits, payments are made automatically at regular designated intervals; therefore, there are no chances of forgetting bills of delaying issues which can cost you extra payment charges.
- Moreover, the companies or organizations which are working through direct debits have to pass through distinct screening procedures, so there are very fewer chances of frauds as they are closely monitored by the banking industry also.