As many businesses can attest, Direct Debit payments are not just a convenient way to collect customer payments, but the system is also one of the most secure, convenient and attractive in the UK payments space.
There are multiple levels of protection throughout the payment process which ensure transactions can be completed safely and successfully for both companies and customers. In addition, payers have access to an extra layer of protection through the Direct Debit Guarantee.
Data shows that Direct Debit transactions continue to grow in popularity as one of the most trusted forms of payment within the UK for consumers and organisations. The non-seasonally adjusted Direct Debit average transaction amount increased by 2% in October 2025, compared with October 2024.
Some customers, who may be new to paying by Direct Debit, might not know about the safeguarding nature of the Direct Debit Guarantee. It’s also important that teams within your organisation understand the details of this customer protection scheme and why it’s essential as a strong pillar for financial health and mutual trust with client bases within your company.
Contents
- What is the Direct Debit Guarantee?
- Understanding the Direct Debit Guarantee: how does it work?
- Building trust with the Direct Debit Guarantee.
What is the Direct Debit Guarantee?
A consumer protection measure applicable in the UK, the Direct Debit Guarantee is relevant for any customer or business that pays by or collects Direct Debits. If a Direct Debit transaction has been made in error or without authorisation from the customer, the full amount of the payment should be immediately refunded by the payer’s bank.
Added to this, the Direct Debit Guarantee ensures that the payer should receive advance notification of any changes to the amount, date or frequency of their Direct Debit payment. Should there be a change to these elements without the proper notice being given to the customer, they are entitled to a full refund.
Customers can also cancel a Direct Debit at any time. This can be done by contacting their bank to complete the cancellation process. They do not need to have a reason and won’t face a charge for the service.
Understanding the Direct Debit Guarantee: how does it work?
The Direct Debit Guarantee covers the whole of the Direct Debit payment process. In order to start a Direct Debit payment, customers must fill in a Direct Debit mandate form, also known as a Direct Debit Instruction (DDI). This is the authorisation that allows businesses to take an approved payment from a customer’s account over a prearranged frequency.
The Direct Debit Instruction must include the following to ensure it is in line with the Direct Debit Guarantee:
- Customer details: these need to include the payer’s name, address and bank account details from which the payment will be taken. Additionally, Bacs enforce that Service Users (the payee) must perform KYC/ID verification checks to maintain compliance.
- Business information: the business or service provider’s name, address and Service User Number (SUN) should be included. The SUN is the identification reference number that allows Bacs to identify the payment processor.
- Authorisation: the customer needs to explicitly agree to the payment being taken from their account. This authorisation must use the language or wording that Bacs has stipulated in its guidelines.
- Advance notice: the customer must be made aware of their rights to be given advance notice of the payment being set up and any future changes to date, amount or frequency of the payment that occur.
- Guarantee: there should be a statement that tells the customer of their rights under the Direct Debit Guarantee, such as their right to cancel at any time by contacting their bank.
- Signature for paper-based instructions: the payer needs to add their signature to a paper mandate form. This can be done digitally for paperless mandates.
Businesses can create digital Direct Debit mandate forms over secure online portals or other channels. The payer can give authorisation digitally or over the phone. A digital mandate must contain all of the same information required to verify the Direct Debit set up, but doesn’t need a customer signature.
Building trust with the Direct Debit Guarantee
If you would like to know more about the Direct Debit process, then read Bacs compliance and security explained: the complete business guide for more information and guidance.
At Interbacs, we offer a variety of Direct Debit solutions so you can select the right one to suit your business needs. Interbacs’ Direct Debit solutions improve your payment collection process, smooth the customer journey and provide you with financial certainty.
With a proven track record in successful Direct Debit management for all types and sizes of businesses and with a compelling industry reputation, Interbacs is well-positioned to support all of your business account needs.
Contact Interbacs today for a personalised consultation and discover how we can optimise your direct debit processes. Our experienced and friendly team is here, ready to help you.
