How to reverse a Direct Debit payment

How to reverse a Direct Debit payment

Direct Debit is one of the safest and most reliable ways for businesses to take payments from customers and has an incredibly low error rate.
But if a payment is taken in error, under the Direct Debit Guarantee, your Direct Debit customers are able to raise an Indemnity Claim to reclaim a payment if it has been taken wrongly or without permission.

The Direct Debit Guarantee protects consumer transactions against fraudulent or incorrect payments. Every payment made through the banks and building societies that use the scheme is covered, and businesses taking the payments have to abide by the scheme’s strict rules.


Protection for the Payer

The Direct Debit Guarantee gives an assurance that customers should be notified in advance of any payment being taken from their account. For regular fixed payments, this could be one notification detailing the future payment schedule.

It’s important to remember that if you are making changes to payment amount, date or frequency, you must notify the payee of any amendments in advance, normally ten working days before the account is debited but a different notice period can be agreed.

Customers have the right to a full and immediate refund from their bank or building society if a payment error is made or the organisation fails to provide notice.

Making a Claim

If a customer notices an error on the same day a payment was made, they can have the payment reversed by calling their bank. After this date, the payment is unable to be reversed and customers will need to request a refund.

Refunds (often known as ‘indemnity claims’) are made by the customer directly from the bank, and you will only be notified after the refund has been awarded. You will be given the reason for the refund and it will be reclaimed automatically by the bank, usually 14 working days later.

Customers have the right to cancel a Direct Debit at any time by contacting their bank or building society. If any payments are still taken, they are entitled to a full and immediate refund from your bank.

If you would like to set up a Direct Debit for regular or one-off payments, speak to London & Zurich today. We will talk you through your options and help you understand every aspect of this cost-effective payment option.

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