Online payment has made it easy for bank account holders to transfer money to others. In fact, according to a report by the RBA (Reserve Bank of Australia), Australian debit card transactions are among the highest in the world. This is contributed by direct debit payments accelerated during the pandemic, with spending on debit cards sharply increasing in 2020.
In addition, other frequent online payment channels like credit card payments, payment gateways, and eCommerce payments are receiving more recognition in the post-pandemic period. With this in mind, what are the advantages of Direct Debit payments in a cashless society?
Direct Debit payments are an online payment process that customers utilise to pay their bills, memberships, and SVOD (subscription-video-on-demand) services. It allows merchants or organisations to withdraw funds from a person’s bank account when their payments are due.
However, direct debit payments come with few restrictions. Typically, direct debit payments are only permitted within the same country for the transactions that take place. The account holder may also incur late penalties if insufficient funds cover a direct debit. Moreover, third-party control over payments is threatened if billing details are provided to an unreliable provider, posing security concerns.
In Australia, financial institutions use the Bulk Electronic Clearing System (BECS) to interact with one another and facilitate bank-to-bank Direct Debit payments. The process begins with the merchant sending a Direct Debit request to their customer. Upon completing this request, it grants permission for merchants to access the payments directly from the customer’s bank account. These transactions are agreed upon in advance and are bill-based, without additional actions needed.
Australia is leading the way toward a cashless society by promoting online payments to tackle environmental and financial implications. Cash manufacturing processes require a significant amount of energy and water, and the transportation of cash contributes to a significant increase in carbon footprint. By going cashless, Australia is taking positive steps to alleviate the impacts cash has on the environment. If every country decides to follow suit, it could significantly impact our planet.
Direct Debit Payments Service at PayChoice
One of the biggest factors driving Australia towards a cashless future is the growth of online and mobile payments. In a cashless society, direct debit payments offer competitive advantages to the local business model, including:
Automation: Direct Debit allows for automatic, repeating payments to be made from a bank account, shortening the need for manual bill payments and helping to keep track of upcoming payments.
Better Budgeting: By having recurring payments automatically withdrawn from their bank accounts, consumers can devise better plans to keep track of their finances and spending in check.
Record Keeping: Direct debit payments provide an online record of consumer transactions, making it easier to track spending and settle bills.
Flexibility: Direct debit services can be set for a wide range of payments, including bills, subscriptions, and charity donations, giving consumers flexibility in their payment options.
PayChoice helps you automate payment collection, cutting down the number of tasks you need to deal with when paying invoices. Find out how PayChoide can help you with direct debit payments. For more services, contact us here!