Direct Debit or recurring card payments? We help you decide.

Making it easier for customers to make payments can be an effective way to boost your business.

Subtle changes in payment types can make a difference to your business so it’s good to understand all the options available to you.

Direct Debit and continuous card payments both make regular and recurring transactions simple, accepting payments that vary in value and regularity. But which is the best method for both you and your customers?

Recurring card payments

Also known as a ‘Continuous Payment Authority’ (CPA), a recurring card payment is an authorisation provided by the customer that allows you, the merchant, to take recurring payments from the customer’s debit or credit card.

Not all customers are happy to set up a direct debit, so this allows you to take recurring card payments that vary in frequency and amount. It will remain in place until the customer cancels the arrangement

Direct Debit

Direct Debit is a simple payment type for a customer and ensures reliability of payment for organisations.

Once payments are authorised via a mandate, regular, recurring payments, payments with varying dates and amounts and one-off collections can be collected.

This payment type is paid directly from the customer’s bank account, so customers must sign up to the Direct Debit using their bank account and sort code.

Customers welcome the high levels of protection offered by Direct Debit. The Direct Debit Guarantee includes assurances that they will get their money back if there is an error made in the payment. They can cancel payments at any time.

As well as reducing admin, this payment type is low cost and available to anyone with a UK bank account, including business accounts. Once a Direct Debit is set up, it tends to have a longer retention rate as payments won’t be interrupted when payment cards expire, change or are cancelled.

What are the key differences?

There are key differences which could determine the best payment type for your business and your customers.

Set up

  • Recurring card payment – You control the date and the amount of the payment. Our online payment gateway allows you to manage every aspect of Continuous Payment Authority payments.
  • Direct Debit – You set up the payment and choose the date and payment amount. London & Zurich can manage the process for you.


  • Recurring card payment – The fast speed of payment varies by provider but the Continuous Payment Authority can clear funds to your account within 24 hours. Perfect for next-day payments.
  • Direct Debit – Direct Debit payments can take up to six days for initial payments to clear and five days thereafter.


  • Recurring card payment – You have the ability to fix or vary payment amounts and there’s no requirement to specify the date when the payment will be collected.
  • Direct Debit – While you can charge varying amounts and adjust the date of the payment without the customer’s authorisation, you do need to give advance notice before payments are taken. This is something we can handle for you.


  • Recurring card payment – The cost of Continuous Payment Authority is typically higher than direct debit, with a monthly fee as well as a small fee per payment.
  • Direct Debit – The costs associated with this payment type are very low. You should expect to pay a small fee per transaction if you use London & Zurich as your merchant account, or a monthly fee to set up your own account.

Customer Retention

  • Recurring card payment – Due to expiring cards and reaching spending limits, payment failure rates tend to be around 5% with this payment type.
  • Direct Debit – As direct debit payments are taken directly from customer bank accounts, payment failure rates are typically much lower with this payment type.

Customer Protection

  • Recurring card payment – Recurring card payments allow customers to apply for a refund when using a credit card. There are limitations when using debit cards.
  • Direct Debit – The Direct Debit Guarantee gives customers a high level of protection and allows them to apply for an immediate refund from their banks if a payment is taken mistakenly.

Which is right for you?

If you’d like to discuss the best payment type for your business, please get in touch with our team who will be happy to talk you through your options and the processes for each payment type.

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