Glossary · Payment methods
Direct debit
A direct debit lets a supplier take payment directly from a customer’s bank account under an authorisation (mandate) the customer has signed.
Direct debit is a “pull” payment. The customer authorises you once, and you collect each amount due on its date. It differs from a standing order, where the customer pushes a fixed amount on a schedule they control.
Because you initiate each collection, direct debit suits variable amounts — usage-based or monthly invoices that change — as well as fixed ones. Customers are notified before each collection.
Schemes differ by country: Bacs Direct Debit in the UK, SEPA Direct Debit for euro payments, and ACH debits in the US. Each has its own rules on notice and on the payer’s right to reverse a payment.
Example
A UK bookkeeping firm collects each client’s monthly fee by Bacs Direct Debit on the 5th. When a client’s fee rises from £400 to £450, a notice goes out ten working days before the first higher collection.