Debit order collection is a way for a third party (that you have given permission), to collect money from your bank account. It’s typically used to collect monthly subscriptions, insurance premiums or loan repayments.
Debit orders can also be explained as a financial transaction in which one person (or company) withdraws funds from another person's bank account or credit card. Formally, the person who directly draws the funds (“the payee”) instructs his or her bank to collect (i.e., debit) an amount directly from another's (“the payer's”) bank account designated by the payer and pay those funds into a bank account designated by the payee. Before the payer's banker will allow the transaction to take place, the payer must have advised the bank that he or she has authorized the payee to directly draw the funds.
In order for a debit order collection to successfully go off from a bank account or card there will need to be an instruction whereby a third party can collect money from your bank account without you having to do anything other than giving such person a written, telephonic or electronic debit order mandate to do so. Debit orders can be processed from normal bank accounts or credit cards (card not present transactions). Debit orders are payment instructions typically used for recurring monthly collections.
Direct Debit offers a complete debit order collection software system, enabling you to collect monthly payments from your customers without the time consuming admin.