Direct Debit is a very popular method of payment used in most countries all over the world. The main purpose of it is to allow automatic payment of outstanding bills so that the bills can be paid more efficiently and more conveniently. Before setup can be initiated the account holder must give his or her permission that the account can be debited. Their permission usually is obtained by the utility company by the use of a payment slip which is then taken to the bank to be processed so that the account can be debited. The details on the payment slip will include, amount, customer signature, date, and how often the account is to be debited. A direct debit can also be setup over the telephone using a formal script to collect the information and also over the Internet through the use of an application form. Having your account debited directly has both advantages and disadvantages which are visited below.

Advantages

- Easy to setup
- Convenient and efficient method of payment
- Once a direct debit has been setup you do not have to worry about late payments or penalties
- It is the cheapest method of payment as opposed to posting a cheque which would cost money for the stamps and envelopes
- The customer has control over the amount and dates of the payment

Disadvantages

- If the balance in your account does not cover the amount due it is still debited which means you could face fees from your bank for being overdrawn
- Utility companies usually calculate your payment amount by using previous consumption figures. This means that you could be paying more than the amount you have actually used
- You have lost some flexibility in the management of your finances

The important thing to remember is that your direct debit is protected by the Direct Debit Scheme. All banks and building societies take part in this, which offers their customers a good level of protection. The scheme means:

- You cancel a direct debit at anytime you choose
- The beneficiary has to provide you with written notice of any change to dates or payments
- That if your money is ever collected incorrectly then the bank is required to give you a full refund

Many people confuse standing orders with direct debits. Even though they are both ways to setup regular payments from one account to another, how they operate and how they are setup in the first place are very different. Where direct debits are usually setup by the organisation requesting payment, a standing order can only be setup by the payer is always for a fixed amount to be paid regularly.

If you would like more information on using direct debit services then you can visit the Eazipay website for direct debit information