I’m a merchant, how can Direct Debit help me manage my subscriptions?

As a merchant who provides subscription services, you have a few options when it comes to getting paid by your customers, but Direct Debit arguably gives you and them the best mutual protection to make sure you get paid what you are rightfully owed.

For the merchant, a Direct Debit agreement is more than just a commitment to a regular payment – it gives you permission to alter the amount the customer pays and even when you get the money, as long as you notify them before any altered payment is collected from their account.

This is ideal for subscription services where the amount owed is not always the same, for example because there are one-off fees charged to the customer on top of their standard subscription amount.

How do I accept Direct Debit as a merchant?

Only authorised firms can accept payment by Direct Debit, and to become one you will typically have to speak to one of the high street banks and go through an accreditation process – it’s usually only worth it for bigger companies.

But there are some third-party Direct Debit processing bureaux too, and if you are not big enough in your own right to go through the hassle of becoming Direct Debit authorised, you could consider a third-party bureau instead.

There are fees associated with Direct Debit bureaux, and it can cost several hundreds of pounds to get up and running with one, but after that the cost per transaction is typically quite small, from about 50p up to around £2 on larger payments.

Alternatives to accepting Direct Debits

If you want to accept regular payments, standing orders are one option. Your subscribers can set them up just using your Arro Business Account sort code and account number, and they are flexible in terms of how much the customer pays you and how often a payment is made.

In the past, people would also sometimes agree to make repeat payments from a debit or credit card, using their card number instead of their account number.

This has fallen out of favour in recent years though, as it offers less protection to the customer, especially when cancelling a payment.

You could also allow one-off payments via Faster Payments or a debit/credit card payments service, if you don’t feel like it is worth getting yourself fully set up to accept Direct Debits as an authorised supplier or via a third-party Direct Debit bureau.

Setting up a business account for subscriptions

Whatever payment methods you accept, it makes sense to set up a separate business account for subscriptions, as it can make it easier to track the money coming in and make sure customers do not miss their regular payments to you.

You can create an Arro Business Account in just three minutes, using your name, UK address, age and company name – you need to be over 18 and based in the UK, and you’ll need to tell us a registered company name to open a Business Account rather than a Personal Account.

We don’t need to run any credit checks as there’s no overdraft or credit card attached to the account, making it a way to accept incoming payments and subscriptions even if your company is very new.

Every Arro Business Account has a sort code and account number in the normal format, so people can transfer money to you in all of the usual ways that they might make a payment into a high street bank account. There’s no third-party app or e-wallet account needed.

Making payments from an Arro Business Account

Finally, an Arro Business Account gives you access to plenty of ways to make payments to your own suppliers too, with a powerful and flexible online account dashboard to set up Faster Payments, Standing Orders and outgoing Direct Debits.

You will also receive a Business MasterCard® debit card with the account. There’s no credit check required for this, as it’s a debit card rather than a credit card, and just spends funds directly from your business account instead of running up a bill to pay at the end of the month.

We only send you your pin and CVV via SMS, the rest of your details can be found on the Arro dashboard, so you can use the card online immediately. The physical card follows in the post too, and this means you can then make cash machine withdrawals or pay by debit card in shops for any supplies and services your business needs.