Collecting recurring payments from customers, direct debit or bankers’ automated clearing services (BACS) all make sense. However, setting up those payments often means choosing a service provider that’s able to manage those payments for you.
In most cases, that means choosing either a managed or a merchant account providing direct debit services. Here, your direct debit provider will almost always be a separate provider from your card payments processor, as most don’t offer both services.
The table below shows a quick comparison of direct debit companies in the UK:
| Direct Debit Company | Rates Per Transaction | Merchant Account | Payment Gateway | Card Payments | Direct Debit Types |
|---|---|---|---|---|---|
| London & Zurich | Custom | Yes | Yes | No | BACS, SWIFT |
| GoCardless | 1% + 20p | Yes | Yes | No | BACS, SWIFT |
| SmarterPay | Custom | No | Yes | Yes | BACS |
| Access PaySuite | 1.4% + 20p | Yes | Yes | Yes | BACS |
| FastPay | Custom | Yes | Yes | Yes | BACS |
| allpay | Custom | Yes | Yes | Yes | BACS |
| BottomlIne | Custom | Yes | Yes | Yes | BACS |
| Lloyds Bank | Custom | Yes | Yes | Yes | BACS, SEPA, CHAPS |
| Clear Debit | 20p | No | No | No | BACS |
| Stripe | 1.4% + 20p | Yes | Yes | Yes | BACS, SEPA, ACH |
| Adyen | Custom | Yes | Yes | Yes | BACS, SEPA, ACH |
| DFC by Xplor | Custom | No | Yes | No | BACS |
| Natwest Bank | Custom | Yes | Yes | Yes | BACS |
*These rates were accurate as listed by the direct debit companies in December 2022. Rates are subject to change at any time. Therefore, please use this research as a basis for your own.
1. London & Zurich
London & Zurich is a direct debit and payment gateway company offering support for almost every part of the payment process.
The company handles direct debit on your behalf, requesting funds from the customer’s bank account and transferring that data to yours.
Unlike many other direct debit companies, London & Zurich also supports payments from most major credit cards and payment wallets. This means you can use a single app for your payment gateway and direct debit services.
- Rates available on request
- BACS, SWIFT compliance
- Merchant account included
- No direct management
- Payment gateway available
- Supports major credit cards and digital wallets
Website: https://www.londonandzurich.co.uk/
2. GoCardless
GoCardless is one of the UK’s largest direct debit providers. The payment solution supports one-off, instant, and recurring payments with a direct debit mandate.
This allows you to accept bank transfer payments for one-time sales, to set up recurring billing, and to ensure that customers have options for automated payments.
GoCardless is based in the UK. However, the platform also offers support for 30+ countries, with SEPA and other payment schemes supported.
It also has an API with more than 350 prebuilt integrations, making it easy to add your accounting apps, business management and sales management platforms, etc.
- Rates start from 1% + 20p
- International payments offered through Wize
- BACS & SWIFT compliant
- Merchant account included
- No direct management
- Payment gateway available
- No support for cards
Website: https://gocardless.com/
3. SmarterPay
SmarterPay is an online payment gateway and processor offering full support for direct debit payments. In addition, SmarterPay is AUDDIS and BACS compliant.
The payment system also integrates into web and checkout forms, enabling direct checkout for retail shops. SmarterPay also offers outbound payment management for vendors and payrolling.
However, SmarterPay does not offer a merchant account, which means you’ll need a partner to manage that part of payments if you want to accept card payments via SmarterPay.
- Rates fully custom
- International payments not available
- BACS compliant
- No merchant account
- No direct management
- Payment gateway available
- Support for major credit and debit cards
Website: https://smarterpay.com/
4. Access PaySuite
Access PaySuite is one of the UK’s largest direct debit companies. In fact, the organization brings Access, PaySuite, Eazipay, Rapidata, Eazy Collect and SmartDebit together into a single platform – complete with direct debit, an online payment gateway, and direct credit.
Access PaySuite stands out with telephone direct debit, variable collection schedules and the option to set up both incoming and outgoing payments.
In addition, AccessPay uses membership levels, which impacts pricing. For the “Ignite” or starter option, you pay a fixed rate per transaction. For other levels, you receive a custom rate based on volume.
- Rates start at 1.4% + 20p
- International payments available
- BACS compliant
- Merchant account
- No direct management
- Payment gateway available
- Support for all major debit and credit cards
Website: https://www.accesspaysuite.com/
5. FastPay
FastPay is a digital wallet, payment gateway and direct debit service.
Here, customers can checkout and pay via bank. However, they can also use any payment options set up in the FastPay app.
In addition, FastPay offers payrolling, money transfer, and payments support to business users.
FastPay is maintained by the Central Bank of Iraq. This means it is not UK-based and you may have some limitations with bank transfers and one-click payments. The service does offer full support, though, for international bank payments.
- Rates are fully custom
- International payments available
- BACS compliant
- Merchant account
- No direct management
- Payment gateway available
- Support for all major debit and credit cards
Website: https://www.fast-pay.iq/
6. Allpay
Allpay is a payment processor offering support for all kinds of payments including cash, direct debit, cards, checks and digital workshops.
The direct debit solution is completely paperless, handling direct debit mandates without a paper schedule.
In addition, with managed and bureau services available, you can fully hand over your direct debit payment collections to Allpay. That makes this direct debit provider ideal for anyone who can’t get into the BACs scheme on their own.
- Rates are fully custom
- UK payments
- BACs compliant
- Merchant account
- Direct management available
- Payment gateway available
- Support for all major debit and credit cards
- Cashpoints and deposit locations
Website: https://www.allpay.net/
7. Bottomline
Bottomline is a large payment and financial technology company offering solutions to global businesses.
In the UK, it also offers extensive direct debit management services, including bureau and managed services. The service also offers insight and tracking for direct debit and payments.
Bottomline also offers card and cheque payment, with full support for recurring payments. Plus, with integrated support for refunds, claims processing, etc., it’s ideal for businesses that manage higher volumes of sales.
- Rates are fully custom
- International payments supported
- BACs compliant
- Merchant account
- Direct management available
- Payment Gateway
- Support for all major debit and credit cards
- Includes extensive financial management
Website: https://www.bottomline.com/uk
8. Lloyds Bank
Lloyds Bank is one of the largest banks in the UK. It also offers extensive business payment solutions. These include BACs compliant direct debit, SEPA direct debit, card payments, CHAPS payments, and international payments.
However, if you use Lloyds payment solutions, you’ll also have to bank with them.
That can be a pro or a con, depending on your current bank and what your alternatives are. If you’re already using Lloyd’s, though, adopting its business payments solutions can be convenient.
- Rates are fully custom
- International payments supported
- BACs, SEPA, and CHAPS compliant
- Merchant account
- No direct management
- Payment gateway
- Support for all major debit and credit cards
Website: https://www.lloydsbank.com/
9. Clear Debit
Clear Debit started as a BACS compliance training bureau. Today, the company also offers direct debit management software and services with some of the lowest rates in the industry.
In addition, Clear Debit is one of the few options on this list enabling paper notices, with software to create and send custom letters with branding and messages.
Clear Debit offers both managed and bureau services. You can also get BACs training, validation software, and screening software to reduce fraud and improve KYC compliance.
- Rates start at 20p per transaction
- UK payments
- BACS compliant
- No merchant account
- Direct management available
- No payment gateway
- No card payments
Website: https://www.cleardebit.com/
10. Stripe
Stripe is one of the largest payment processors in the world and in the UK, it also offers BACs compliant direct debit and recurring payments.
Unlike many competitors, Stripe also offers recurring payments through cards. Plus, as an international business, you can accept international bank payments via SEPA and other schemes.
In addition, Stripe offers a merchant account, a payment gateway and functions as a payment processor. This means you can handle every stage of billing, invoicing, and checkout payments via Stripe.
- Rates start at 1.4% + 20p
- International payments
- BACs, SEPA, ACH compliant
- Merchant account included
- No direct management
- Payment gateway
- Supports all major payment methods
Website: https://stripe.com/
11. Adyen
Adyen is another major payment processor, offering support for almost all payment options including BACS, SEPA and ACH. It also offers a payment gateway and payment processor, with options to directly integrate into apps and websites.
In addition, Adyen supports refunds and recurring payments, with payout on the same day of the transfer.
Adyen charges a flat rate per payment option used. This means you’ll pay a different rate depending on how your customers pay.
- Rates for BACs set at 60p
- International payments
- BACS, SEPA, ACH compliant
- Merchant account included
- No direct management
- Payment gateway
- Supports all major payment methods
Website: https://www.adyen.com/
12. DFC by Xplor
DFC, formerly Debit Finance Collections, is a direct debit management solution with full management offered by the company.
Here, you sign up and DFC takes over direct debits, account setup, management and notifications. The service is also fully paperless, with all information and notifications handled via the Internet or SMS.
In addition, DFC supports customizable payment timelines per customer. This means that customers can choose the day they pay, reducing the chance of missed payments.
- Fully custom rates
- UK payments
- BACs compliant
- No merchant account
- Direct management available
- Payment gateway
- No support for card payments
Website: https://www.debitfinance.co.uk/
13. NatWest Bank
NatWest Bank is a full-service bank offering personal and business accounting. The bank also offers a suite of business payment solutions, including card, cheque and BACS transfers.
NatWest delivers these services via Tyl, which offers card readers, payment gateways and mobile payments.
BACs payments are handled via NatWest Autopay, which offers two rates based on transaction volume. In addition, you have to bank with NatWest to use this service.
- Fully custom rates
- International payments
- BACs compliant
- Merchant account available
- No direct management
- Payment gateway available
- Full support for all major card payments
Website: https://www.natwest.com/
What Is A Direct Debit Bureau?
When you make a direct debit payment, you submit the request to the BACS scheme for approval. If you set this up on your own, you directly submit those transactions.
A direct debit bureau (DDB) does so for you, meaning that they collect your data and send it to BACS on your behalf. Here, the bureau may use your service user number (SUN) with BACS or theirs.
Service user numbers impact how your direct debit shows up on your customer’s account.
If you use a managed service and use your bureau’s number, their name will show up on the debit. However, if you gain access to BACS on your own, you can get your own SUN.
In addition, many direct debit providers will help you to set this up so that you can bill using your own SUN.
DDBs are ideal for businesses that don’t qualify to make BACS submissions themselves, for those with a small number of transactions, or with an unreliable payment collections process.
Managed Direct Debit Services
Managed direct debit services mean that your direct debit bureau takes over every part of the direct debit process.
With a standard bureau, you collect data and send it to the bureau. With a managed service, the bureau collects the data and sends you the payment.
Benefits Of Implementing Direct Debit Payments
Direct debit payments are one of the safest and lowest-cost payment options available. For most UK users, direct debit costs an average of 1% or more or less than paying by card.
In addition, with options to set up recurring payments, direct debit can greatly reduce the chance of unpaid or missed payments.
With payments deposited directly into your bank account, direct debit can also improve cash flow consistency overusing credit cards or payment processors.
Direct debits are ideal for:
- Recurring payments
- Higher value payments, where 1-2% can result in significant cost savings
Direct debits are also extremely valuable because 90% of the UK uses them for at least one bill. Most people have a bank account and setting up this payment method is something they are familiar with.
However, it’s also important to keep in mind that you need a signed direct debit mandate to start requesting funds.
In addition, you’re legally required to send a notice 10 days before starting a direct debit.
Otherwise, the customer is legally allowed to start a chargeback process. That makes direct debit less ideal for one-off payments.
Direct Debit vs Standing Order: Differences
A standing order is a bank transfer that a bank account owner sets up to transfer money to another bank account. This can be to a person, an organization, or a charity.
The transfer is scheduled to repeat, usually based on a monthly schedule. However, the account holder can stop it at any time.
A direct debit is set up by the organization requesting payment. Here, you ask the customer to sign a direct debit mandate, giving you permission to withdraw funds.
Using this means that the business and the customer are protected in case something goes wrong.
For example, the direct debit guarantee means that if the customer cancels without due notice, you are still entitled to withdraw funds. Or, if you withdraw too much money, the customer is legally entitled to an immediate refund.
This is similar to a continuous payment authority (CPA), which is required to withdraw money from a credit card. However, CPAs are entirely between businesses, while direct debit is between the BACs scheme and the bank.
Next Steps
Setting up a direct debit can mean starting an account with BACs and handling everything manually. However, for most small businesses, it makes more sense to choose a direct debit provider or a bureau, which handles direct debit setup, permissions, management, and transactions on your behalf. However, with different types of services and different features offered, it’s important to decide what your business needs before choosing a company.