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Merits of Direct Debit or Credit/Debit Card?

MrToast
Grafter
Posts: 550
Registered: 31-07-2007

Merits of Direct Debit or Credit/Debit Card?

Being a CC payer I've just been sent a short survey asking why I don't use DD.

Having answered the survey I'm left wondering about the relative merits for each party.

PN are putting forward the point that your DD doesn't need renewing as a C/DC does when you are issued a new card from time to time. I'm not sure thats enough to make me switch.

Are there other benefits either for the customer or PN?

If collection is more cost effective for PN by DD that might be another reason for using DD if there is no down-side for the customer. After all I have an interest in an efficient ISP if I'm to get value for money.
19 REPLIES
N/A

Merits of Direct Debit or Credit/Debit Card?

Isn't Direct Debit better for you because then you are covered by a guarentee aswell.
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Merits of Direct Debit or Credit/Debit Card?

I imagine credit card takes more of a cut than direct debit - since it save the bank loads - so it's better for PlusNet.

DD is much better for you for < £100 payments since they will refund any money without you giving a reason. The bank will then claim it back off the supplier.

With CC you are better off > £100 since the CC company is liable (legally, you have paid the CC for the service) so you don't have to deal with a bad company, you just claim it back off the CC and they claim it back off the supplier.

In monthly payments, CC also has the disadvantage that you cannot cancel payments. Even if you lose the card and close the account you are liable for whatever PlusNet take out for as long as they take it out.

With Direct Debit, if you cancel, it takes immediate effect. That is what I shall do just before my payment as a way of getting attention (to my LLU disconnection), and if I lose my account and don't get a MAC code and have to pay someone else for BT activation then I can't see that I'm worse off than now.
Community Veteran
Posts: 14,469
Registered: 30-07-2007

Merits of Direct Debit or Credit/Debit Card?

In simple terms, you have control over stopping payments with DD, PN have control over stopping payments with CC.
N/A

Merits of Direct Debit or Credit/Debit Card?

Unless they pass the debt to a recovery service, then you will be worse off than now Wink

I suspect the reason that PN prefer DD is as mentioned above. Companies that process card payments frequently charge around 1.5% for the priveledge. (You may have seen the signs near supermarket checkouts or printed on receipts) so perhaps collecting via DD means they can save some cash?
Community Veteran
Posts: 2,814
Thanks: 152
Fixes: 2
Registered: 05-04-2007

Merits of Direct Debit or Credit/Debit Card?

Yep, I think there was some legislation passed I think where companies have to state the charge - which is why you see signs saying "Our company x, pays 2.5% of the transaction to Company x Card Handling Services Ltd, the total amount you pay remains the same". Of course if more industries become like holidays or ticket booking then for some reason it is acceptable for the merchant to pass on the charge to yourself by adding on a free rather than absorb it themselves. Even Ikea jumped on the gravy train by introducing CC charges.

But as been said, DD is most probably cheaper for PlusNet and better for yourself as you can dispute charges and get them reversed and also cancel the DD if you wish. Of course this is often not a good idea since the company will chase the payment via some other means - but at least the option is there, which doesn't exist with recurring CC payments.
The_10th
Grafter
Posts: 1,090
Registered: 08-04-2007

Merits of Direct Debit or Credit/Debit Card?

With some credit cards you can get cash back with your payments thus saving you more money on your connection don't forget!
Community Veteran
Posts: 2,814
Thanks: 152
Fixes: 2
Registered: 05-04-2007

Merits of Direct Debit or Credit/Debit Card?

Although even the cashback offerings seem to be dwindling. Amex Blue (which used to offer 1% on all spending) changed it to 0.5% up to £2000, and 1% after that. I got a letter a few weeks ago saying words to the effect of its going to be less favourable and become 0.5% up to £3500.

There are still some good deals though, the best I am aware of is Egg Money which is 1% on everything subject to a £200 cash back limit per year. Not that this is a problem for me as I don't intend on spending more than £20,000 on the card!
AndyMan
Grafter
Posts: 81
Registered: 30-07-2007

Merits of Direct Debit or Credit/Debit Card?

Pay for Plusnet via CC or even debit card and your account is updated as paid immediately ... Do it by Direct Debit and it can take days sitting as "pending" , which means , if for example , you have gone over your bandwidth allowance and are waiting for it to be reset then under DD you can wait days. I know this from personal experience ...
The_10th
Grafter
Posts: 1,090
Registered: 08-04-2007

Merits of Direct Debit or Credit/Debit Card?

Quote
Although even the cashback offerings seem to be dwindling.


I know but better in your pocket Tongue
nairobi
Grafter
Posts: 35
Registered: 31-07-2007

Merits of Direct Debit or Credit/Debit Card?

Quote
I think there was some legislation passed I think where companies have to state the charge - which is why you see signs saying "Our company x, pays 2.5% of the transaction to Company x Card Handling Services Ltd, the total amount you pay remains the same".

Actually, I think you'll find that that has more to do with VAT than with legislation. I'll probably make a berk of myself, but I'll try to explain...

As I understand it, a company saves itself a sliver of VAT using the "2.5% solution" because finance charges are VAT exempt. So rather than charge you £10 for something (including £1.49 VAT, which goes straight to HMRC, so the retailer only pockets £8.51), they pay £0.25 to the service company, pay £1.45 in VAT and pocket £8.30. Because they own the service company, and would have had to pay handling fees anyway, they do slightly better under this arrangement, saving a princely 4p per £10 retail price - woohoo!

The loser, of course, is HMRC, so the country's tax take is lower.
Plusnet Staff
Plusnet Staff
Posts: 12,169
Thanks: 18
Fixes: 1
Registered: 04-04-2007

Merits of Direct Debit or Credit/Debit Card?

Hi,

There are a number of reasons for choosing Direct Debit over Credit Card (or Debit Card).

We'll start with the debit card, our bank limits us on the types of payment that can be taken by debit card, technically they should only be used for a one off payment (e.g. paying an activation fee or buying an item from the shop).

Credit cards on the other hand can also be used for continuous authority payment like a monthly subscription, but as suggested cards do have an expiry date, and they can be lost or stolen so payments can fail if the bank doesn't get a new card out to you quick enough.

As mentioned Direct Debits have the direct debit guarantee and yes, payments taken by direct debit cost us less than credit cards (something like 5p per Direct Debit up to about 25p I think for Visa and Mastercard and about 50-60p for Amex). Which for over 200,000 subscription accounts that's fair old chunk of change each month.
Plusnet Staff
Plusnet Staff
Posts: 12,169
Thanks: 18
Fixes: 1
Registered: 04-04-2007

Merits of Direct Debit or Credit/Debit Card?

Quote
Pay for Plusnet via CC or even debit card and your account is updated as paid immediately ... Do it by Direct Debit and it can take days sitting as "pending" , which means , if for example , you have gone over your bandwidth allowance and are waiting for it to be reset then under DD you can wait days. I know this from personal experience ...


That shouldn't happen now, yes, the payment will show as pending for a few days while it's going through the banking system but usage and any restrictions on the account are removed on the billing date.
The_10th
Grafter
Posts: 1,090
Registered: 08-04-2007

Merits of Direct Debit or Credit/Debit Card?

Quote
Hi,

There are a number of reasons for choosing Direct Debit over Credit Card (or Debit Card).

We'll start with the debit card, our bank limits us on the types of payment that can be taken by debit card, technically they should only be used for a one off payment (e.g. paying an activation fee or buying an item from the shop).

Credit cards on the other hand can also be used for continuous authority payment like a monthly subscription, but as suggested cards do have an expiry date, and they can be lost or stolen so payments can fail if the bank doesn't get a new card out to you quick enough.

As mentioned Direct Debits have the direct debit guarantee and yes, payments taken by direct debit cost us less than credit cards (something like 5p per Direct Debit up to about 25p I think for Visa and Mastercard and about 50-60p for Amex). Which for over 200,000 subscription accounts that's fair old chunk of change each month.


Interesting points but a secondary credit card can be setup if needs be.

The saving to PN of 20p at least per payment would certainly mount up so why not give an incentive to customers to chose DD over other options like other businesses do, e.g. BT give £1 per month off by DD? I am not suggesting that but added 'extras' like domain hosting etc. Smiley
Plusnet Staff
Plusnet Staff
Posts: 12,169
Thanks: 18
Fixes: 1
Registered: 04-04-2007

Merits of Direct Debit or Credit/Debit Card?

Quote
Interesting points but a secondary credit card can be setup if needs be.


True, but the secondary card is only used if the primary card expires. If it's lost or stolen and the card hasn't been updated then the payment would fail.

Quote
The saving to PN of 20p at least per payment would certainly mount up so why not give an incentive to customers to chose DD over other options like other businesses do, e.g. BT give £1 per month off by DD? I am not suggesting that but added 'extras' like domain hosting etc. Smiley


Interesting idea, will make sure it's flagged to the marketing guys.

Edit: typo