Why implement Direct Debit payments as part of your web application development

How your business gets paid is just as crucial as what you sell. For many enterprises, especially those reliant on recurring revenue, membership fees, or subscription models, payment collection can be a persistent headache – riddled with late payments, administrative burdens, and frustrating customer experiences. This is where implementing Direct Debit payments directly within your web application, specifically leveraging a specialist like GoCardless, becomes not just a technical enhancement, but a critical business strategy.

Direct Debit is a well-established and trusted payment method in the UK, offering an automated "pull" payment system where you, the merchant, initiate the collection of funds directly from your customer's bank account, once authorised. Integrating this functionality into your web application via GoCardless offers a compelling array of business advantages, transforming your payment processes from a potential bottleneck into a powerful engine for growth and efficiency.

GoCardless and others have innovated with ‘open banking’ as a payment mechanism but the reality is that consumers still expect Direct Debit payment. It is likely to be some years before consumers are comfortable with using ‘open banking’ to authorise a regular payment.  

Here at Appdrawn, we keep an eye on technical developments and work to bring you the best strategic advice. If you are weighing up options, get in touch with our ‘Software Development’ Consultancy Team as they will be best placed to discuss the options with you.

In this blog post, we’ll discuss the benefits of Direct Debit payments in your web application and how GoCardless is a natural payment provider option.

1. Superior payment success rates and enhanced cash flow

One of the most significant pain points for businesses is failed payments. Card payments, whilst convenient for one-off transactions, are prone to failure due to expiration dates, lost or stolen cards, or issuer declines. These failures lead to lost revenue, increased administrative work chasing payments, and damaged customer relationships.

Direct Debit, particularly through GoCardless, boasts an impressively high success rate. Payments are linked directly to bank accounts, which rarely change or expire. GoCardless stats show successful collection of over 97% of payments on the first attempt, and their "Success+" feature intelligently retries failed payments on the optimal day for each customer, pushing success rates even higher. For your business, this translates into:

• More predictable revenue: knowing that a higher percentage of payments will clear on schedule significantly improves your cash flow forecasting and financial stability.
• Reduced debtor days: businesses using GoCardless often see their average debtor days decrease, meaning you get paid faster, putting money back into your business sooner.
• Less chasing, more doing: fewer failed payments means less time and resource wasted by your finance team on credit control and manual payment chasing, allowing them to focus on more strategic financial activities.

2. Significant cost efficiencies

Traditional card payment processing typically involves percentage-based transaction fees that can quickly escalate, especially for higher value or high-volume transactions. Direct Debit, by contrast, offers a far more cost-effective solution.

GoCardless's transparent pricing model often involves lower, fixed transaction fees compared to card payments, potentially saving your business a substantial amount, particularly as your transaction volume grows. But the cost savings extend beyond just transaction fees:

• Reduced admin costs: automation of payment collection and reconciliation, especially when integrated with accounting software like Xero or QuickBooks (which GoCardless seamlessly does), drastically cuts down on manual data entry and administrative time. This can free up staff hours, or even entire roles, enabling re-allocation to more productive tasks.
• No card network fees: by moving away from card-based payments for recurring billing, you bypass the varying and often higher fees charged by card networks.  GoCardless are competitive and enterprise deals are on the table to be had.

3. Streamlined operations and automated admin

Manual payment processing is a drain on resources. Chasing invoices, manually reconciling payments, and dealing with customer queries about failed card transactions consume valuable time that could be spent on growth activities. Implementing Direct Debit via GoCardless directly within your web application automates much of this workflow.

Once a customer sets up a Direct Debit mandate (a simple, one-time online process via your web app), all future payments, whether fixed subscriptions or variable invoices, are collected automatically on the due date. This means:

• "Set and forget" for recurring revenue: for subscription businesses, memberships, or instalment plans, the process becomes entirely automated, freeing up your team from repetitive tasks.
• Simplified invoicing: for businesses invoicing regularly, you can simply create the invoice, and GoCardless handles the collection, often reconciling it automatically with your accounting system.
• Reduced human error: automation minimises the risk of manual errors in data entry or reconciliation, leading to cleaner financial records.

4. Enhanced customer experience and trust

While businesses clearly benefit, the customer experience is paramount. Direct Debit is a highly trusted payment method in the UK, underpinned by the robust Direct Debit Guarantee. This guarantee offers customers powerful protections, including immediate refunds in case of error, advance notice of payments, and the right to cancel at any time. This ingrained trust makes customers more comfortable setting up recurring payments.

Integrating GoCardless into your web application means:

• Convenience for customers: once set up, customers no longer need to remember to make payments or update card details. This 'fire and forget' approach reduces friction and makes paying you effortless.
• Flexibility for variable payments: unlike Standing Orders (which are fixed amounts), Direct Debits are flexible. GoCardless allows you to collect varying amounts when necessary (e.g., utility bills, usage-based subscriptions), provided you give adequate advance notice, without needing a new authorisation from the customer each time.
• Professional image: offering a widely recognised and trusted payment method like Direct Debit, managed by a reputable provider, enhances your business's professional standing and credibility.

5. Future-proofing your payment infrastructure

As we discussed at the top of the article, the shift towards bank-to-bank payments is slowly gaining momentum. Leveraging GoCardless positions your business at the forefront of this evolution. Their platform supports not only traditional Direct Debits but also innovates with solutions like Instant Bank Pay (powered by Open Banking for immediate one-off payments), providing flexibility for varied payment needs within only an extension of a single integration. This ensures your payment infrastructure remains agile and capable of adapting to future payment trends and customer preferences.

The strategic imperative

For any business with recurring revenue, membership models, or regular invoicing, implementing Direct Debit payments in your web application using GoCardless is a compelling strategic imperative. It's an investment that delivers tangible returns through improved cash flow, reduced operational costs, enhanced payment success rates, and a more seamless, trusted experience for your customers. By automating and optimising your payment collection, you empower your business to operate more efficiently, scale more effectively, and focus its valuable resources on core growth initiatives. It's time to stop chasing payments and start accelerating your business's financial health.

If you’d like some strategic advice around web application payment decisions, get in touch with our team of software development consultants.