There has been a fair bit of controversy lately surrounding the fact that those paying their utility bills by cash or cheque can expect to pay around £114 more a year than customers paying by Direct Debit.
Energy companies claim the increased cost to process cash or cheque payments is behind this ‘stealth tax’, with more than 50% of energy suppliers charging customers more for non-Direct Debit payments. Robert Halfon, a Conservative MP, wants providers to cap these extra charges at £24 a year (that’s just £2 a month), which would make the situation fairer all round.
For those who already pay their utility bills by Direct Debit, the benefits are clear, but if you are considering switching to this payment method, you might be wondering what the benefits are and why Direct Debits are a faster, more efficient method of payment.
The benefits of Direct Debit payments
Customers paying their energy or phone bills by Direct Debit will always save money compared to those paying by cash or cheque. But that’s not the only benefit of paying by Direct Debit – there are plenty of others too:
- Save time – Nobody wants to spend their time waiting in a queue at the bank or on hold to telephone banking just to pay a bill; Direct Debits enable you to automate your payments, making the whole process easier.
- Easier to manage your finances – Setting up Direct Debits means you no longer need to remember to pay your bill as the money will be debited automatically from your account on the agreed payment date.
- Simpler to budget – If most of your Direct Debits come out around the same date each month, budgeting with your remaining money is simpler.
- Environmentally friendly – You can usually opt out of receiving paper bills, and if you don’t need a payment slip, you can choose to view your bills online, reducing your carbon footprint and doing your bit for the environment.
- Easy, efficient and secure – Payments are covered by the Direct Debit Guarantee, which means that your bank or building society should refund you immediately and in full if an error is made in the payment of your Direct Debit.
Whether or not changes to the system will mean that energy suppliers and mobile phone networks are able to continue offering a discount to customers paying by Direct Debit or not, Direct Debit Providers UK will still be in demand as Direct Debits continue to be the most popular payment method in the UK.
Direct Debit payment solutions make life easier for businesses of all sizes, providing a number of benefits including increased customer retention, improved cash flow and the ability to free up time and resources which can be spent generating more business revenue.
Ali Moiyed is one of the payments industry’s true pioneers. Frustrated by the slow pace of innovation within global payments, Ali created AccessPay using ground-breaking cloud-based technology to remove unnecessary cost and complexity from payments processing, cash management and treasury systems.