How to set up recurring payments


For many merchants, subscription-based business models are an attractive opportunity as it generally requires little management and the funds are transferred directly into their bank. However, some recurring billing methods can be very time-consuming and potentially error-prone from a customer support and financial point of view. As such, Direct Debits can provide a much-needed solution to this problem, as outlined in the “What is Direct Debit?” section of our website, but how exactly do both merchants and their customer’s set up recurring payments?

Customers

When a customer would like to set up a recurring payment, they have at least two options to choose from: standing order or Direct Debit. Despite this decision, many merchants will only accept automatic payments through Direct Debit as it is a much more cost-effective and efficient method of collecting payments. Using this method also ensures that customers are protected and is much more beneficial way of managing their regular outgoings.

For a consumer, setting up a Direct Debit couldn’t be easier, simply follow the three simple steps below and you’re all set!

  1. Obtain in a Direct Debit mandate from the merchant you wish to pay
  2. Complete the form by including the following information:
    • Your name and address
    • Name and address of your bank
    • BIC and IBAN are both required including the name listed on your bank account
  3. Submit the form to the merchant you wish to pay and they’ll do the rest!

Naturally, you may think that this is a little inconvenient for you to have to submit the form to your bank. However, SEPA direct debits work in a different way, since the creditor is responsible for the management of your mandate ensuring that all required details have been received. Once all of your details have been submitted, the merchant will then forward these details directly onto your bank authorising them to process the transaction from your account to the merchants.

Merchants

Due to the nature of subscription-based products or services, many merchantsprefer to collect payments by SEPA Direct Debit as it protects both parties, while being a much more efficient alternative to other recurring payment methods. Using Direct Debit is the most effective method of collecting recurring customer payments from their bank account to yours.

For merchants, all you need to do to set up a SEPA Direct Debit with your customers is to either;

  • Have the customer fill out a SEPA Direct Debit mandate, with your nominated bank details, and submit to their bank

Or alternatively,

  • Obtain the required information directly from the client and forward the instructions directly onto the customers’ bank

Note: For further information on SEPA Direct Debit please visit the European Payments Council website.



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