What is bank debit?
Bank debit is an umbrella term for various bank-to-bank payment methods around the world, which are designed for recurring payments. In the UK and Europe, bank debit is more commonly known as Direct Debit (where it is administered by Bacs in the UK, and SEPA in the eurozone). In the US, many refer to it as ACH Debit. There are several elements which these payment methods have in common:  One-time authorisation - To pay via bank debit, a merchants customer only needs to complete a one-time, up front authorization form, which gives permission for that merchant to directly withdraw funds from their account. Pull-based - Bank debit enables a merchant to control when they take payment from a customers account. This differs from push-based payment methods, such as bank transfer, where the merchant relies on the customer taking action to make the payment. Bank-to-bank - Funds are transferred from the customers bank to the merchants bank, without involving the card networks (such as Visa or Mastercard). Fixed or variable - Payments can be of fixed or variable amounts, and they can also occur at fixed or variable frequencies. Here at GoCardless, we use the term bank debit because we serve customers all over the globe. Where we can, well use the country-specific terminology (e.g. Direct Debit when were speaking to UK businesses), however this isnt always possible. When were speaking to a multi-country or global audience, or to a region which doesnt have a strong association with a singular term, we avoid confusion by sticking to bank debit. At a high level, payments via bank debit work as follows:  Customer chooses to pay via bank debit  Customer completes an authorization form  Merchant sends advance notice to the customer of the upcoming bank debit payment  Merchant submits payment request via the relevant bank debit scheme  The banks execute the request and settle the transfer of funds  Merchant receives the funds in their bank account, after any relevant clearance period  For more detail, check out how online payments via ACH Debit work. Bank debit schemes around the world  As stated above, bank debit is an umbrella term that covers many different payment schemes around the world, notably including:  Country Scheme Currency Australia BECS AUD Canada PAD CAN Denmark Betalingsservice DKK Eurozone SEPA EUR New Zealand BECS NZD Sweden Bg Autogiro SEK United Kingdom Bacs GBP United States ACH USD  We have a number of guides to these bank debit schemes, to help answer any questions you may have:  Benefits of bank debit  For businesses, accepting payment via bank debit offers many benefits over alternatives like card payments, bank transfers, and digital wallets like PayPal. Low cost - As bank debit payments are routed through the banks networks rather than card networks like Visa or Mastercard, fees can be significantly cheaper. Improve cash flow and reduce payment chasing - As bank debit is a pull-based mechanism, you dont have to rely on your customers to manually pay you. Instead, funds are withdrawn from their account automatically on the due date. Less payments admin - Once its set up, bank debit saves both you and your customers time, by enabling you to take payments automatically without your customer needing to lift a finger. Lower payment failure and reduced churn - Bank debit payments are taken automatically and from your customers bank account. This helps fight churn in two ways. Firstly, unlike manual payments, automatic payments dont provide your customer a regular interval to reconsider continuing the relationship with your business (i.e. when they must pay you). Secondly, bank accounts dont really expire, get cancelled or are stolen, unlike credit and debit cards - so payment failures are much less frequent - reducing instances of involuntary churn. Flexibility - Payments via bank debit can be fixed or variable amounts, as well as be taken at fixed or variable frequencies. This is a key advantage bank debit has over standing orders. Easy to access / high penetration - For your customers to pay you via bank debit, they just need to have a bank account. They dont need additional products like credit cards or digital wallets. How to access bank debit  There are three primary ways a business can get started taking payments via bank debit. These are:  Accessing the scheme via a bank debit provider like GoCardless Accessing the scheme via a bank debit bureau Directly accessing the scheme via the banks  From top to bottom, these options are increasingly difficult and expensive to set up and maintain. If you want to get started with bank debit quickly and easily, opt for a payment service provider who specialises in bank debit, like GoCardless. If you have the time, funds and resource to set up and manage direct access to the scheme, theres an extra element of control you can have over the process, however this is usually only a feasible option for large enterprise businesses. More detailed guidance on how to access a specific bank debit scheme can be found in the guides linked to above. We can help  GoCardless helps you automate collection of recurring payments, via bank debit. Find out how GoCardless can help you with ad hoc payments or recurring payments.