Many people are not even aware that there are several alternative solutions available in the marketplace that offer the same key benefit as a Direct Debit: the ability to take a regular, scheduled payment from a customer.
Direct Debits have been around for a number of years now and are the de-facto standard for achieving the desired goal, but they are notoriously cumbersome to set up from a merchant perspective, costly and far from straightforward to administer. Paper forms that need to be filled, signed, scanned returned and direct debit guarantees that need to be read out or displayed.One alternative that is especially convenient and offers an easy, low-cost setup for any vendor or merchant are solutions that allow merchants to take regular scheduled payments from their customer’s credit or debit cards, usually their existing merchant account.
Five of the most obvious benefits, to both merchants and consumers alike, are explained below…
Benefits to Merchants
1. Easy to Set Up
Most merchants already have a merchant account in some shape or form to allow them to take credit and card payments. All a merchant needs do is speak with one of the many ISO’s (Independent Service Organisations) out there who enable recurring transactions to be set up typically via a “MoTo (Mail Order Telephone Order) Virtual Terminal” using their existing merchant account. An internet search will find most of them in a few clicks.
2. Easy to Administer
Once you have your ISO provided “virtual” terminal, all you need do is log into it via any web-browser, take your customer’s card-holder details over the phone and request permission to take a regular payment. In a few clicks the payment is set up. If you never web-coder they could also offer your customers the ability to do this via your web-site, too.
3. Low Cost
All the merchant will then pay, in addition of course to what they already pay for the privilege of owning a merchant account of course, is the cost of the transaction. In the case of debit cards, this will likely be no more than a few pence, but may be a little more if you are taking payments from a credit card. But at least it if it’s a credit card you know that the payment is unlikely to bounce.
Benefits to Merchants’ Customers
Customers will have all of the protection afforded to them that every credit card transaction offers under the Consumer Credit Act.
Their card details will be stored on PCI DSS compliant servers rather than having to write their banks details down on a piece of paper and sign it, as typically happens when setting up a Direct Debit.