Direct Debit Question please?

Peteltt33

Hello.
Can anyone please offer clarification on the following?

Question has recently come up as to why, as two private individuals with bank accounts, can set up a Standing Order between themselves, they do not appear to be able to set up a Direct Debit?

Given the fondness of Utility Companies, commercial concerns and indeed the banks themselves, for the use of D/Ds, one would have thought they ( the banks ) would have been only to happy to oblige.

Any thoughts please?
Thank you. Pete.

pqrdef

Because some people are dishonest, and a system where payments are instigated by the payee is just the sort of thing they might be tempted to use dishonestly.

antrobus

Peteltt33 wrote: »

Hello.
Can anyone please offer clarification on the following?

Question has recently come up as to why, as two private individuals with bank accounts, can set up a Standing Order between themselves, they do not appear to be able to set up a Direct Debit?

Given the fondness of Utility Companies, commercial concerns and indeed the banks themselves, for the use of D/Ds, one would have thought they ( the banks ) would have been only to happy to oblige.

Any thoughts please?
Thank you. Pete.

If you want to collect money by DD you have to be sponsored by a bank who will check whether you meet the "required criteria, which involve checks for integrity, financial standing and administrative capability".

http://www.bacs.co.uk/Bacs/Businesses/DirectDebit/Collecting/Pages/GettingStarted.aspx

If you think you meet the 'required criteria' you could give it a go. But it might be a bit expensive for just the odd payment here and there.

pmduk

There's nothing wrong with a standing order surely? If you need variable amounts to be sent then use faster payments.

dzug1

pmduk wrote: »

There's nothing wrong with a standing order surely? If you need variable amounts to be sent then use faster payments.

Or just edit the standing order date and/or time whenever needed

InsideInsurance

Peteltt33 wrote: »

Question has recently come up as to why, as two private individuals with bank accounts, can set up a Standing Order between themselves, they do not appear to be able to set up a Direct Debit?

The reason is because who controls the transfer:

Standing order - Push - the originating account holder must set it up, controls the amount, frequency and duration and can cancel it whenever

Direct Debit - Pull - the recipient account holder simply certifies that the originating account holder has agreed to it being set up, the recipient controls the amount and frequency. The originating account holder can cancel it whenever


So if you had the ability to set up DDs you could simply claim that any bank account holder had given you permission and withdraw as much as you want from their account.

Under the DD guarantee the originating account holder could immediately get the money refunded as unauthorised but then your bank has the fight of getting the money off you, evidently a problem if you withdrew the £100,000 before any of your victims identified the fraud.


In actual fact, "anyone" can apply for permission to set up DDs but there are vetting processes and guarantees that a private individual would struggle to meet.

There are third party companies that will do DD on your behalf if you think they'd be useful (in a similar sort of way as PayPal) but their fees tend to be fairly high.

Peteltt33

Many thanks to Antrobus and Inside Insurance for your replies and for the link provided by Antrobus.

So, in order to set up a Direct Debit between myself and another private party, I would have to go " cap-in-hand " to a Bank, so that " THEY " could then opine as to " MY " Integrity- Financial Standing and Administrative Capability.

Given the performance of the Banks over the last five to ten years, I think that is a BIT B****Y RICH!

Many thanks again, Pete.

InsideInsurance

I would argue they don't do it in the capacity of a higher moral standing but a much more practical aspect of "if we give them the authority are they going to run off with all our money by defrauding others and leaving us to carry the can?"