How do online payments via Direct Debit work?
The process for accepting payments via Direct Debit can vary significantly, depending on two key factors. The process for accepting payments via Direct Debit can vary significantly. It is largely influenced by:  Whether a business accesses the Direct Debit scheme directly, or goes through an intermediary  The country that the business and customers banks are located in  (As weve written extensively about the topic of Direct Debit in the past, this section will give a simple overview of the Direct Debit process. To learn more about Direct Debit in-depth, take a look at our reference guides.) In simple terms, Direct Debit is a payment method which allows businesses to collect funds owed by their customers, without the customer (the payer) needing to initiate the payment. This kind of mechanism is referred to as a pull-based payment method (see more on push and pull methods later in this guide). Once a business sets itself up to accept Direct Debit payments from customers (whether directly or through an intermediary), the process to begin collecting those payments looks like the following:  The customer completes the merchants checkout process and elects to pay via Direct Debit. The customer is provided and completes a Direct Debit Mandate form (may be online, paper-based, or via telephone). The business (or the business Direct Debit provider) submits the completed mandate to the bank, authorising them to automatically collect payment when its due. The business notifies the customer of the upcoming payment that will be collected from them, in a specified time in advance (dependent on the Direct Debit scheme, which changes according to country). The business submits a payment request via the Direct Debit scheme they are a part of (this is dependent on the country they and their customers bank are located within). The business (or Direct Debit providers) sponsor bank (the bank that enables them to access the Direct Debit scheme) and customers bank action the payment request when the payment becomes due, ensuring the correct amount is debited from the customer and credited to the business. There is typically a clearance period (again, dependent on the Direct Debit scheme) between the payment due date and the date the funds are deposited into the business account. For more detailed, region-specific information about Direct Debit, check out the following resources: