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March 10, 2022
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Benefits of Direct Debit for Businesses in Indonesia: Unlocking the Easiest Way to Bill Customers
May 11, 2023
The popularity of direct debit as a preferred cashless payment option for customers has grown significantly over the past decade in many Western regions. In Europe, direct debit is currently the 3rd most popular form of non-cash payment, accounting for 20% of all cashless payments in the continent in 2022.
Similarly, customers in Indonesia and other Southeast Asian countries are increasingly adopting cashless payments, particularly since the popularity of online shopping via e-commerce and contactless payments (QR codes, e-wallets, etc.) for offline transactions. A report by Google, Temasek, and Bain & Company published in October 2022 shows that digital payments' Gross Transaction Value (GTV) in Southeast Asia surpassed US$800 billion in 2022, marking a 35% increase since 2019. These figures are projected to continue to rise as the region embraces the growth of its digital economy, which could provide businesses to introduce the direct debit payment system for customers within the region.
What Exactly is Direct Debit?
Direct debit is a payment method that allows businesses to automatically withdraw funds from their customer's bank accounts (with prior consent) in real-time to pay for goods or services. It’s often used for recurring or regular payments such as rent, utility bills, retainers, loan payments, installment payments, subscription services (e.g. Netflix, Adobe), and many more.
Furthermore, direct debit guarantees customers be able to pay all their bills at once, thus reducing the need for separate transactions. It is also a convenient and secure payment option that eliminates the need for customers to manually pay their bills, reducing the risk of late payments and associated fees.
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How Does Direct Debit Work?
For customers to set make account payments via direct debit on their own, these are the usual steps customers can follow:
- (1) Upon checkout for a product and/or service, customers can select the desired bank from which they want to make the payment from.
- (2) Complete the account linking process by filling in the bank account information and other personal details, including full name and phone number.
- (3) Complete the account verification process either via an OTP sent via SMS or other simple verification methods via email.
- (4) Once successful, customers can set their desired payment schedule and authorize recurring payments to be directly deducted from their bank accounts.
- (5) As long as customers have enough account balances in their bank accounts, future regular payments will be auto-debited from the customers based on their chosen payment schedule. Customers can also change their payment schedule anytime on the business provider's website or mobile app.
Benefits of Direct Debit for Businesses in Indonesia
No More Payment Delays
Offering direct debit as a payment option can enhance customer satisfaction by providing a more convenient and hassle-free payment experience. Direct debit ensures that all transactions directly can be deducted from the customer's bank account on a scheduled basis, eliminating the need for customers to manually make bank account payments, remember payment due dates, or worry about late fees. This level of convenience and ease of use can help build customer loyalty and retention.
Cost Savings
Direct debit can be a cost-effective payment option for businesses compared to other payment methods. By automating payment collections, businesses can save on the costs associated with processing paper checks or credit card payments. This payment benefit can lead to significant cost savings over time, particularly for businesses that process a high volume of transactions.
Reduced Administrative Tasks
By eliminating the need for manual tracking and follow-up with customers for payment, direct debit can save businesses valuable time and resources. With payments collected automatically and on time, businesses can redirect their efforts toward core activities that drive growth and profitability, rather than administrative tasks such as invoicing and collections.
Predictable Cash Flow
Direct debit can provide businesses with a more predictable cash flow as payments are collected on a scheduled basis. This can enable businesses to forecast future revenue streams more accurately and plan for growth and expansion accordingly. Reducing payment delays and uncertainties can help businesses maintain financial stability and support their long-term goals.
Enhanced Security
Collecting payments directly from a customer's bank account (with prior consent) can offer businesses a higher security level than traditional payment methods like paper checks or cash. With direct debit, businesses can reduce the risk of fraud and errors, protecting themselves from financial losses and reputational damage that can occur from security breaches or payment errors. This added security could build customer trust and help businesses maintain a positive reputation.
If Your Business is Looking to Utilize Direct Debit in Indonesia…
...then let Ayoconnect handle it for you! We are the leading Indonesian fintech (financial technology) firm in providing the best Open Banking and Open Finance APIs (Application Programming Interface) and have beentrusted by more than 200+ companies across Southeast Asia. Our Direct Debit API will guarantee your business to receive payments from customers instantly, all without the need to manually bill them for every transaction, and improve your payment flow as a whole.
With our easy-to-use dashboard for monitoring and 24/7 customer service team, we are confident that our Direct Debit payment solution will be able to support your business' payment infrastructure for any of your customer billing needs, whether it’s to process recurring payments (e.g. loans, subscription services, utility bills), or one-time payments from your business clients or even customers’ online shopping transactions.
With us, you will also get seamless, direct integration for your Direct Debit services from our seven partner banks in Indonesia: Bank BRI, Mandiri, BNI, CIMB Niaga, Danamon, Bank Syariah Indonesia, and Bank Neo Commerce. Ayoconnect is already licensed and recorded by Indonesian payment authorities Bank Indonesia (BI) and Otoritas Jasa Keuangan (OJK) respectively, ensuring that your payment processes require no additional regulatory authorisation.
Ready to #MoveForward with us? Contact us for more information here!
