If your company accepts payments from clients on a regular basis, you’ll need to select a payment processing solution that is both convenient and safe. As part of this process, it is beneficial to compare and contrast the differences among Direct Debit versus recurring payments. While both recurrent card payments and Direct Debit allow for the establishment of a regular payment schedule, there are some variations between the two methods of payment. Whenever comparing a recurring payment system to a Direct Debit system, there are a few things to keep in mind.
When you accept recurring card payments, you may set up future payments for your clients. This is useful when a one-time transaction is required for a future date or when a payment is collected at regular intervals, such as weekly, fortnightly, monthly, or yearly. SecurePay protects your clients’ credit or debit card information by storing it in encrypted form. By substituting the card number with a truly random, one-of-a-kind placeholder number known as a token, we are able to protect critical information.
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In finance, a direct debit (sometimes known as a direct withdrawal) is indeed a financial transaction wherein one individual (or corporation) withdraws monies from the bank account of another person. Payments are made through the Automated Clearing House (ACH) network, and the procedure is simple because the consumer only needs to enter their bank information once. When a consumer signs up for direct debit, they agree to make a recurring payment to a business that will be automatically debited from their bank account.
Direct debit is commonly used to pay expenses such as utility bills, vehicle loans, magazines, and newspapers subscriptions, gym memberships, and other similar items such as membership fees.
Recurring payment Vs. Debit Card
Despite the fact that both varieties appear to be relatively similar, there are some significant variances between them. You must choose the sort of product that best meets the demands of your company and your customers. To find out the differences, have a look at the qualities listed below:
Constructing a structure
A unique feature of both recurring card payment, as well as direct debit, is that merchants have total control over the amount and timing of the payment transaction. Customers may handle practically all elements of their CPA payments through the use of online payment channels.
When it comes to payment speed, recurring payments are a better alternative than one-time payments. Recurring card payment transactions can be completed the same day, despite the fact that payment speeds vary from provider to provider.
On the other hand, direct debit payments frequently take six days to clear payments at first and five days to transfer payments. Because of this functionality, recurring card payments are perfect for recurring payments that need to be made the next day.
Which one to choose?
If you want cash to clear more quickly, recurrent card payments have a modest advantage over Direct Debit in this regard. Both modes of payment, on the other hand, provide a consistent and predictable cash flow. The majority of companies choose to utilize Direct Debit as a payment method, with the bank serving as an intermediary for payment processing as well as security, both the company and the client benefit from additional security.
When comparing the costs of Direct Debit with recurring card transactions, Direct Debit seems to be the clear victor due to the significantly cheaper per-transaction fees associated with Direct Debit. Direct Debit also has the added benefit of lowering failure rates, which helps to decrease payment churn. Bank accounts, unlike credit cards, do not expire on a regular basis, and even if a client switches accounts, the Current Account Switch service immediately transfers all payment details between the new and old accounts.
If your company provides subscription services, it is worthwhile to set up Direct Debit in order to provide a consistent and predictable source of payment. Cashfree makes it simple to accept recurring payments with pull-based Direct Debit, resulting in a superior recurring payment experience that integrates seamlessly into your existing website or mobile application.