The reasons why Direct Debit continues to grow
As the volumes of Direct Debit grows (annual transactions topped 5 billion in the 12 months running up to the end of September 2025), we consider why Direct Debit remains so popular.
What is Direct Debit?
Direct Debit is a payment method, governed by Bacs. It allows businesses to collect money directly from a customer’s bank account. With Direct Debit, an instruction is given from the owner of a bank account, to their bank or building society. This authorises a business to collect varying amounts from their bank account. It is based on the reassurance that the customer will be given advance notice of the collection before any money is taken.
The latest statistics
Statistics published recently by Bacs show that volumes of Direct Debits were 5.008 billion in the 12 months up to the end of September 2025. This represents a 2% growth rate over the previous period. Over the last 20 + years this payment method has shown steady and consistent growth and there are no signs of this changing. In value terms, in the last 12 months £1.5 billion was collected via Direct Debit. This amount was collected by the 50,000+ organisations that have been approved to use the Direct Debit service. You can read the latest statistics on the Bacs website.
So why does Direct Debit continue to be so popular?
Why Customers like Direct Debit
- Convenience:
Payments happen automatically. The customer doesn’t need to remember to make a payment. They don’t need to put a note in their diary to pay on the correct day, remember the organisations bank details or reference – or be concerned that they pay the correct amount. The collecting organisation takes responsibility for processing the transaction meaning lots of time saved for the customer. - Avoids missed payments:
Because Direct Debits are processed by the collecting organisation, the customer doesn’t have to worry about paying late, incurring fees or losing access to required services (e.g. utilities, insurance, subscriptions, etc.). This in turn, provides peace of mind. - Flexible:
If the amount owed changes, e.g. because its based on usage or there is a price increase, the amount of the Direct Debit can change quickly and easily. This isn’t the case with payment methods like Standing Orders for example, where the customer would have to amend the amount. In addition, customers can cancel a direct debit at any time via their bank. This provides a degree of comfort and reassurance. - Advance Notice:
The Direct Debit rules state that no customer can have money collected from their account without being told the amount and date of collection in advance. This provides peace of mind for the customer and because Direct Debits have been around since 1968, customers are familiar with and trust this payment method. - Security and protection:
Direct Debits are protected by the Direct Debit Guarantee. This is a powerful protection for the payer. It guarantees that a full and immediate refund will be paid from the bank if an error is made. No other payment method offers this immediate refund. This is a great reassurance for the customer. Knowing they will get a full and immediate refund can help build trust that the organisation is reputable and bolster the organisations image.
Why Collecting organisations choose Direct Debit
- Predictable cash flow:
Regular payments come in on an expected date, improving financial planning and reducing admin to manage aged debt. - Lower admin time and costs:
Direct Debit is often the cheapest way to collect income with bank fees being typically lower than for other payment methods like Faster Payments, cheques, credit card fees or CHAPS. As well as savings in terms of processing costs, the cost of administration can also be lower. Direct Debit is an automated, bulk collection method. This means less manual processing. Typically, there is just one file to prepare for submission to Bacs (as compared to individual processing if customers pay via bank transfer, cheques or card payments). This means less time spent by the team. - Customer retention:
Because payments happen automatically, customers would have to take an action to cancel. As a result, retention rates are typically higher when payment is made via Direct Debit. - Feedback:
Direct Debits come with a full set of Reports generated by Bacs to advise about the status of your payments and your customers. If the customer changes bank details, the organisation is made aware. If the customer cancels, a report will tell you and if a Direct Debit fails you are advised the reason why. This can help with customer communication and payment reconciliation. - Fewer failed payments:
Direct Debits are collected from the customers bank account, rather than on a card. As accounts don’t expire, get stolen or lost in the same way as cards can, the Direct Debit Instruction can remain in place for longer. In addition, if Bacs reports are actioned, the organisation knows in advance when a customer has cancelled and can remove them from the collection file. This means that the organisation has a much better idea of what will be collected before it happens.
Still have questions?
Direct Debit is a reliable, secure, and cost-effective payment method. It is preferred and trusted by both customers and collecting organisations. Volumes and values of Direct Debit transactions continue to grow – especially where there are recurring, regular payments e.g. in subscriptions, utilities and memberships. This growth shows no signs of changing in the near future so if you are interested to learn how Direct Debit could benefit your business, contact us. We are here to help!