Home – New Forums Money matters Benefits of direct debit vs recurring credit card payments online?

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  • #967572
    adam6677
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    I’m in the process of establishing a business that will allow prospective members to join online and have recurring payments processed online.

    I’ve been getting mixed views from payment providers as to whether direct debit from a bank account is a better option than taking recurring payments from a credit card.

    I don’t know about you, but I’m more likely to have a credit card on me than my bank account details and therefore thought it would be an easier option for prospective members.

    I understand that from a cost perspective credit cards can be more expensive to process, however I believe they can be processed (authorised) in real time with a direct debit being an overnight process.

    My preference would be to go with one type of payment, however don’t want to limit my market. e.g. how many customers could I lose going solely with a credit card payments only.

    Would love to hear from others regarding their experience in this area and if you have any statistics/ information on consumer preferences.

    #1027253
    Felicity_Sapphire
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    Hi Adam,

    I don’t have any experience in offering these services to clients, however, I would have thought that if you take a payment from a credit card, it will go through regardless of the available balance. If you try to take a payment by direct debit and there are insufficient funds in the person’s bank account, then the payment will not go through.

    In relation to getting the money in your account, the money you get from a credit card merchant facility will not be in your bank account until at least the next day (or a few days later with Amex).

    Good luck with your business!
    Felicity

    #1027254
    Beautician
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    Would love to hear from others regarding their experience in this area and if you have any statistics/ information on consumer preferences.


    I comment as a consumer and someone who managed accounts for a business (not as a business owner per se).

    From an administration point of view, administering debit accounts, in my experience, actually costed more to maintain in terms of man hours, especially when there were discrepancies. With credit card payments, you can implement the protection systems meted out by VISA (for example) which saves you time and hassle.

    As a consumer, I would never ever allow an organisation (or anyone for that matter) to have access to my accounts. In the past, chasing discrepancies has been time consuming and full of hassles. Example: health insurance company overcharged me every month for about six months until it was picked up. I then had to sign THEIR forms and run through THEIR hoops to get MY money that THEY took without my authorisation. I’ve been overcharged before on my credit card and VISA had it sorted within 12 hours.

    To that end, it’s a credit card system for me every time both as a former administrator and current consumer.

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