What is the Direct Debit Guarantee?

Finances are always a major concern for any person living on the face of the earth. Whether you run an individual business or are involved in middle to large scale businesses, finances will always be the most important aspect when it comes to functioning effectively. Therefore, being aware of the various options that are available at your disposal is very crucial. The direct debit guarantee has gained an immense amount of momentum in recent times and is essentially a very profitable way of financing. Besides, you can get in touch with some well known direct debit providers to help you with the process. However, there is every possibility that you may be new to this area or may have never come across terms similar to the direct debit guarantee. Given below are some crucial details that you should be familiar with when it comes to the direct debit guarantee.

1.The direct debit guarantee in simple terms:
While the direct debit guarantee may seem like a lot to take in, in layman’s language, this simply means a guarantee which has been created to safeguard the interest of the customers. Essentially, if there has been a mistake in the process of payments, the direct debit guarantee can be very useful as it helps give back the payer, who is usually the customer, a complete refund in the event of a payment done in a fraudulent manner. As a rule of thumb, every banking or financial institution that is entitled to pay direct debits can offer this guarantee to their customers.
2.What is the main function of a direct debit guarantee:
To put it simply, the direct debit guarantee has essentially been designed to offer their full support to their customers in terms of protecting them from fraudulent activities and payments that can harm their financial status. There are three aspects that are very crucial when it comes to protecting customers through the direct debit guarantee:
i.Having the customers notified:
For any organization or a financial institution, it is very important that the before any payment has been processed, a notification be sent to the concerned customer.
ii.Prompt refunds in case of errors:
If the customer believes that the payment is, in fact, not valid and that it has been made in a fraudulent manner, then it is important for the direct debit providers to refund the money.
iii.Cancelling the feature:
If you wish, you can also have the direct debit feature cancelled immediately. All you have to do is get in touch with the organization or the bank through which you had signed up for the program.
3.The reality of the Direct Debit Guarantee:
When it comes to having a reality check, there is barely 0.2% of the payments pertaining to direct debit that are ever really charged back. However, it is not a given or a static number. This can always change based on the type of business that is undertaken as also the gravity of the charge back in question. However, when it does come down to the charge back, there is a high amount of risk involved in companies that are particularly known for being involved in the businesses mentioned below:
i.All kinds of liquid assets with a particular target on currency loans. This is simply because the possibility of a charge back on a fraudulent basis increases tenfold when liquid assets are involved.
ii.Products that are known for their incredibly high value like automobiles. This is simply because the dealer can be at the end of a loss induced deal in case a fraudulent activity takes place.
Author’s bio:
Pete Campbell is a Content Manager for London & Zurich, one of the UK’s biggest direct debit providers to small and medium sized businesses.