Variable Direct Debit/Debit Card-what's the difference?

LindsayT

I'm with Octopus. At the moment I pay by debit card each month on receipt of bill as they didn't charge extra for this and my account is updated within a couple of days.
They give me 14 days to pay and I always paid before the 14 days. I actually paid the last bill on the day I received it and would be able to do that each month.
Been wondering (but can't quite make up my mind yet) whether to pay now by Variable Direct Debit as they now say rates will be a little cheaper.
I've read that Variable Direct Debit is taken 14 days after receipt of bill.
Is this correct? If so, how does it benefit them by taking a payment 14 days later, therefore making my rates cheaper, rather than me paying before 14 days?
Can anyone explain this please?

[Deleted User]

LindsayT said:

I'm with Octopus. At the moment I pay by debit card each month on receipt of bill as they didn't charge extra for this and my account is updated within a couple of days.
They give me 14 days to pay and I always paid before the 14 days. I actually paid the last bill on the day I received it and would be able to do that each month.
Been wondering (but can't quite make up my mind yet) whether to pay now by Variable Direct Debit as they now say rates will be a little cheaper.
I've read that Variable Direct Debit is taken 14 days after receipt of bill.
Is this correct? If so, how does it benefit them by taking a payment 14 days later, therefore making my rates cheaper, rather than me paying before 14 days?
Can anyone explain this please?

Can be set up automatically, and is in the control of the company so is less risk.  Also is simpler to process.

MattMattMattUK

LindsayT said:

I'm with Octopus. At the moment I pay by debit card each month on receipt of bill as they didn't charge extra for this and my account is updated within a couple of days.
They give me 14 days to pay and I always paid before the 14 days. I actually paid the last bill on the day I received it and would be able to do that each month.
Been wondering (but can't quite make up my mind yet) whether to pay now by Variable Direct Debit as they now say rates will be a little cheaper.

That is correct, due to the way the EPG is structured the rate for Direct Debit are cheaper, which is different from Octopus's normal system.

LindsayT said:

I've read that Variable Direct Debit is taken 14 days after receipt of bill.
Is this correct?

Yes, at least from the standard process.

LindsayT said:

If so, how does it benefit them by taking a payment 14 days later, therefore making my rates cheaper, rather than me paying before 14 days?

Your credit/debit card payment will cost them a processing fee, usually around 15-20p, plus a handling charge, for them that charge is probably around 0.75-1.0%. The reason they are making it cheaper is because of the way the EPG is structured, meaning that they have to offer at the differentiated rates or they would be losing money. 

DullGreyGuy

Its all automated and in their control... whilst to date you have paid each bill on time customers do forget, get sick etc and miss payments or pay the wrong amount all of which incur the costs of chasing payment, dealing with refunds, complaints etc these can be avoided when you handover control to them.

The fees to them for a DD and DC are likely to be different, though have never worked on a project about DD to know what the average fee is for a large business.

LindsayT

Thanks for the replies guys.
I understand about some people being late etc. with Debit Card payments and that DD is under their control but didn't realise there was a processing fee for Debit Card.
It's all clear now, thanks again.

DullGreyGuy

LindsayT said:
didn't realise there was a processing fee for Debit Card.

For a medium to large enterprise the fee for a debit card payment is a fixed fee... or sometimes its between two values if the company takes a lot of micro payments.  This is why they will give you cash back on a purchase with a debit card (fee remains the same) but not on a credit card which has an uncapped percentage fee and so adding cash back would increase the fee the business pays. 

DD's will also have a processing fee (business dont get anything for free) but I honestly dont know how the two compare... its likely to only be pence different but its still another consideration on top of the other benefits.