Paying your bills by Direct Debit; what you care to know
Paying bills is one of the unpleasant responsibilities particularly in our part of the globe. You are most likely to travel long distances and join a queue which may be long and slow if you are not lucky.
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You are also likely to be served an overdose of poor customer service from an uninspiring attendant or one who cannot take his or her eyes off a programme showing on a television set placed in customer service centres, ostensibly to entertain regulars.
These common encounters discourage many from visiting bills paying points which invariably deny the already anaemic service providers, especially state-owned ones, the much-needed revenue.
It is probably in response to challenges such as this, that experts have developed solutions which are as beneficial to the customer as they are to the service providers.
Thanks to technology, the world continues to grow smaller and such solutions have found their way to Ghana. An example is the Direct Debit payment system.
What is Direct Debit?
Direct Debit is an instruction from a biller (e.g. insurance company, Utility Company, Pension Fund Manager, etc) authorising their bank to collect agreed amount(s) from the bank account of their customer who has signed a mandate giving advance notice of the collection amount and date.
Put simply, you are authorising a service provider you want to pay, to collect varying amounts from your account, but only if you have been given advanced notice of the amounts and dates of collection.
It is pretty much like setting a standing order and asking a service provider such as an insurance company to take money from your bank account to settle your premium.
You can use Direct Debits for payments such, as mortgages, utility bills, insurance premiums, loan repayments, rent, subscription-based service payments, etc.
It remains a critical collections instrument in most mature European markets and has become an instrument of choice for regular bill payments. In 2012, Europe did 22.5 billion Direct Debit transactions while 13.7 billion transactions were done in the USA.
In the 2015 edition of the World Payments Report, Direct debit was identified as one of the rapidly growing non cash payment alternatives globally for utilities, insurance premiums and tax payments.
Even though in Ghana, Direct Debit is going through its developmental stages, all the necessary infrastructure needed to make it work are available.
How do you get one done?
Fortunately, the basic infrastructure for Direct Debit to thrive has been established by the Ghana Interbank Payment and Settlement System (GhIPSS). It is one of two payment options under the Automated Clearing House (ACH), with the other being Direct Credit.
So all that is required is for service providers to set up a Direct Debit in conjunction with their bankers and inform their customers.
Customers can then sign mandate with specific instructions very similar to Standing Orders, such as the amounts to be deducted, the name of the receiving company and the dates on which the deductions should be made and there you go. As a customer you have the right to cancel the instruction at any time.
Benefits of Direct Debit
Direct Debit is acclaimed as very useful as it is one electronic payment system which is mutually beneficial. It creates convenience, cuts cost and provides security to both the customer and the service provider. It is worth thousand times more than the few minutes you will spend to set it up.
It is guaranteed
As a result of its electronic nature, every payment made through Direct Debit is guaranteed. You will get your money back in the unlikely event of error in payment. The system provides a solid audit trail which allows for an effective way to reconcile payments. Also, in the event of increases in the amount to be paid, the customer is given advanced notice and as earlier indicated, one can cancel earlier authorisations.
Customer convenience and operational efficiency
Another significant benefit is the fact that it is a powerful tool for companies to delight their customers and achieve customer service excellence. This is because all the bad experiences that a customer endures during physical encounters are eliminated.
The customer can now get his or her bills paid promptly without trekking long distances or queuing. While the customer is enjoying enhanced service, the company gets prompt payment for services rendered.
It allows for predictability, and the service provider, knowing well how much it will get from customers, at predetermined dates, can do a lot with such expected inflows.
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For our country where default and delayed bills payment are suffocating service providers, Direct Debit comes as a hot and ready panacea.
It saves you money
Another obvious benefit is the fact that both customers and service providers could make savings when they opt for Direct Debit.
While the customer will save on transport cost and time spent in the queues and potential loss of money through theft and others, the service providers avoid huge cost in collecting and handling cash, which is time and energy sapping as well as cumbersome, not to talk about pilfering. It is not surprising that in some countries, customers are offered discount in return for paying by Direct Debit.
A relief from life’s pressure
The unpleasant experience of your pay TV going off or your power being disconnected can be unnerving, particularly when the pressures of life caused you to forget to pay your bills and not because you did not have the money.
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The beauty of Direct Debit is that payments are done automatically, so bills are never forgotten.
Akin to all the mentioned benefits is the comfort it brings. Life is hectic and with this roasting sun, you are better off getting your bills paid electronically. You can also request for a statement on bills paid to enable you to plan your spending pattern and you can easily identify anomalies if any, which would be reversed.
Conclusion
Direct Debit, undoubtedly, is very popular globally and considered the best payment system for bills. The technology is already here with us and the banks have been prepared to be able to offer it with little or no hitch.
The benefits are enormous and for a country such as Ghana, we cannot afford to ignore this efficient payment system, so simple to effect.
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As GhIPSS and banks partner to make the system work, public education will be badly needed to drive home the benefits of this payment system.
Service providers, who trumpet the accolade of customer excellence, have yet another tool to deliver on their promise but they must ensure that it is offered to the best of standards.
But most importantly, key stakeholders who provide this service will have to ensure its smooth operation, so that patrons will be enticed not only to use it repeatedly but to become disciples and by word of mouth, drive others to also ask for Direct Debit from their banks.