Barbara wrote on Feb 23^rd, 2008 at 2:23pm:


There are people out there who refuse to put their credit card details over the internet as they fear something will go wrong. Actually it is much safer than the same people who will willingly give the same details over the phone which is not encrypted.

Direct debit is a very safe way of paying your bills as NGM explains. When you think about it something like your membership to the AA will be continuous with D/D. If you forgot to renew your S/O you could be in a bit of a fix if you broke down, just as one example.

janitor wrote on Feb 24^th, 2008 at 12:52pm:


When BT currently allows those who receive a paper bill in the post but pay by DD to receive the full DD discount I agree that is unfair when customers who pay by online transfer they initiate or initiate at a bank branch are charged extra.  BT is unfortunately saying that they believe all cash customers are a worse risk of default and that is why they are charging extra.  What they should perhaps do is allow customers to pre-pay in advance in cash and charge them no extra for doing so and perhaps pay a modest but not market leading rate of interest (eg 4% or something) on the cash held before it is used.  Also they should give a discount to those customers who accept email or online only billing and pay by DD compared to those who insist on paper billing as there are obvious real cost savings there to them as a company not to mention to the environment.

Sadly many of those who can only pay by cash are considered such poor credit risks that they cannot get conventional bank accounts or credit cards.  Interestingly there is now a mastercard you can get without an address or credit score just by paying cash over the counter in various Paypoint type stores.  This works well for non credit worthy people online but unfortunately BT and various utility companies only accept direct debit because it is cheaper than credit card and being near monopolies they don't have to worry about losing customers due to only taking direct debit.

As to security worries about use of DD sadly it is age ralated by and large.  My parents were very sceptical for some years but eventually found they had to take the plunge and having done so were amazed by its reliability compared to frequent errors by bank staff made over the years when in keying in the amounts from hand written cheques.

The banks don't allow companies they think will disappear with the money to have a DD setup because if any criminal or fraudulent activity is conducted the banks are liable for refunding all the money on DDs taken for goods and services not provided.

I thought that the main benefit of a DD was that the payee controlled the timing (and amount, subject to the DD guarantee and terms) of the payment. They would then know of "bounced" and refused ones within two or three days, with only a very tiny percentage coming back to bite them later on.

I had always therefore assumed that this prompted the differentiation.

Just as the terms for credit and debit cards are different and so I should expect to pay less with a debit card.

I am involved with an organisation collecting rents by direct debits and for us, using direct debits is much more efficient and accurate.  There are around 100 properties.  We used to use standing orders.  Under the old system, the banks were asked to make the individual payment on the Monday of each week.  This resulted in that number of entries on our bank statement.  There was a credit every day of the week even though the Monday payment day was specified.  Rents were increased once a year and errors were always made – payments being made twice, payments not being made, changes being made at the wrong date etc.  It normally took 3 months to rectify the situation.  If a payment was stopped, it was easy to miss this fact.

We now collect by direct debit.  I set up the DD claim, the debit to the tenant’s account and credit my account happen on the same day and there is only one entry on my bank statement rather than 100 previously.  If a payment is rejected, the amount is reclaimed 2 days later.  If a direct debit authority is cancelled, BACS tell me immediately.   When the rents increase, it is a simple matter to change the DD claim.  For me, DDs are much more efficient.  For the tenants who are elderly, it is much easier as they don’t have the trouble of rectifying their banks’ errors.  One should always remember the Direct Debit Guarantee which covers the repayment of items collected in error. 

A number of points -
1) I take exception to the claims in some posts that only old people don't want to use DD, the implication being that they are too old 9or not intelligent enough) to understand them - THIS IS NOT THE CASE and I find the inference quite insulting.   Many, many people of all ages either have personal experience of DD going wrong or know of others who have.

2)  It should be remembered that the people who use BT or whoever are CUSTOMERS and, as such, should have a CHOICE!   BT are NOT doing them a favour by letting them have a phone or phone line, the customer is doing BT a favour by using them and paying them for a SERVICE!   I am sick of people fogetting that.

3)   The point made by the landlord illustrates my point, that is is ALL for the convenience of the person providing the service, not the customer.   IF customers choose to use DD, fine, if they do not, that choice should also be respected.   As I said in my first post on this matter, DD hands control to the bank/company.   If I use SO or pay a bill when I get it (the inference that only people with debt problems do this is way out of order!), that should be my right of choice.   With DD, if a mistake is made with a decimal point or in the bill itself, it is such a problem to resolve (see my posts under Orange Shop for example), if one cancels a DD to resolve a problem, technically one is in breach of contract (ref Consumer Direct), often, if an overpayment is taken, the company will only reimburse it to the account not to the bank account of the wronged customer (eg Orange will not refund overcharges to a bank account only an Orange account).  This could leave a customer overdrawn & facing bank charges through no fault of their own and hundreds of pounds out of pocket for months while the overpayment works through the system.

One of the main platforms of the sayno campaign is, surely, customer choice - the choice to use a telephone number, as a customer, which best suits them.   This should, in my view, apply to payment methods.

A last point - sometimes, customers are led to believe that they have to pay by DD but may find challenging it brings the response that you can pay by another method if you choose.  An example was our endowment policy - we were paying by DD because we thought we had to, when we were caught in the underperforming policy trap, we did not want to continue this as it allowed them to raise the premiums as they wished, we challenged it & now pay by SO so we fix the premium by MUTUAL agreement (& we got the mis-selling resolved as well!)

I wrote a long and detailed response to dorf and Barbara and then was a victim of a major long term technical failing with the forum software that used to afflict me more in the days when I used a dial up connection.  That is to say that when I first posted my computer was not connected to the internet due to my wireless router thowing a wobbly and that in this situation the lousy YaBB forum software merely loses your post even if it is a long and complicated one.   Grrrrggghhhhh!

Better forum software merely reports that the connection is offline and takes you back to the posting screen with the post you are writing still intact.

To summarise to dorf and barbara neither of you are bad payers or irresponsible people but are caught up in using a method of payment now favoured largely by those temporarily resident in the country with no credit history, by young people with no financial track record and by people who deliberately opt for non DD payment so that they can use the goods and then commit ID fraud etc to try to pay for them.

The companies find this method of payment costs them more and so they quite rationally try to dicourage it.  This then in turn reduces the manual payers to an even narrower hard core of unreliable credit risks, even though caught in with that is a small hard core of those of you who wish to make a point that you like to be in control of making the payments and using the method you have been used to all your lives.

Whilst you say I am wrong to make an age related point I think you will find very few people under 30 indeed have an issue with DD, whereas a lot of people over 50 do because in their youth cash was king and it is unthinkable to them it has now become a less favoured form of payment.  Ditto if we look at those who most mistrust online banking (leaving aside issues of not also having the training or the equipment that are again age related) any research is going to show you it is mainly the over 45s who distrust it.

If one uses internet security products and also takes precautions like clearing the temporary internet cache and cookies before making online financial transactions then in my experience problems can be avoided.  Also I distinctly recall that in the days when the credit card system and bank system was more manual there were regularly problems with human induced errors that happen far less these days.

Of course I would advise anyone who has a problem with companies who cannot be trusted to ever bill accurately like TalkTalk to instantly leave those companies for another supplier if they have a choice.  Unfortunately TalkTalk and Tiscali attempt to counter their utter incompetence and disorganisation as companies by using their corporate muscle they have to provide prices nobody else can beat but for what is generally a third rate (especially in broadband which is not a homogeneous product of a single quality) service.

According to this Ofcom dont have a problem with the extra charge,s as long as their made clear, and they only include the provider’s extra costs of collecting normal payments and not an opportunity to collect further revenue.


http://www.saynoto0870.com/cgi-bin/forum/YaBB.cgi?num=1204213949

"Charges for paying bills by cash or cheque rather than by Direct Debit

* When providers advertise prices, they must make clear what any extra charges for paying by cash or cheque will be.
* If a provider does not make the extra charges prominent and transparent enough that consumers see them as part of the main price under the contract, then the charges must reflect direct costs only. They should only include the provider’s extra costs of collecting normal payments and not an opportunity to collect further revenue.
* However, where the extra charges are prominent and transparent enough, normal competition – and not regulation – will provide price discipline on behalf of consumers. Customers will then have all the information that they need to know which provider to choose. "

I pay my BT bills by electronic transfer from my bank account and would challenge anybody to show that this costs BT £4.50 per bill more than a DD transfer.