3rd party Direct Debit services - expensive!

[MisterMusty]

Hi,

I've been looking into my business accepting payment via direct debit as we'll be invoicing the same people different amounts over the course of time. As a startup the high st banks won't go near me as a direct debit originator so I've been looking at companies like iDirectDebit and others who provide a 3rd party direct debit service. The problem is they charge a lot for it and I currently can't see a way of making it cost effective unless I'm dealing with a high level of sales which, as a startup, I'm not going to be for a couple of years. They've quoted me a setup fee ranging from £250 to £700, the cheaper coming with monthly fee of £38.50, then 35p per transaction and a £1.50 one-off fee to set up each person paying me.

Does anyone else use these services? Have I got the right end of the stick in finding them v expensive? How do others take direct debit payments?

How long will I need to have been in business before the high st banks will let me be a direct debit originator?

thanks all.

 

[GRDCredit]

I think you are looking too deeply at the costs and not enought at the benefits.

I am not sure what sort of volume you are talking but imagine you were collecting 200 payments of £20 every month.

After the initial set up - in your scenario - you are talking a charge of £70 (200 x 0.35p) to collect £4,000. (I would steer clear of the monthly fee people - who have you spoken to out of interest?)

Compare that with having to collect 200 payments by other means each and every month. e.g. 200 cheques, trips to the bank, phone calls and letters when they are not received etc

All depends on volumes..