Direct debits allow you, as a bank or building society customer, to pay bills easily and conveniently, saving the time and trouble of writing and sending a cheque, or paying in cash. They can be used to pay regular bills as well as to spread a larger bill in instalments across a period of time.
Originators find direct debits easy and convenient to use in much the same way as customers.
Direct debits make cash flow easier to manage because businesses know exactly when cash is flowing in and out of their accounts. The Direct Debit Scheme started with paper claims in 1967. The organisations able to make direct debits are known as originators. They must meet the approval of a major bank or building society before they are allowed access to the Direct Debit Scheme. They only have authority to collect amounts authorised by the customer and only on or after a specified and pre-notified date, which forms part of the Direct Debit Guarantee by which they are bound.