Glossary
Direct debit
A direct debit is a pull payment: the payer signs a mandate once, and the merchant, through its bank or provider, debits the payer's account on the agreed dates. SEPA Direct Debit in the euro area, ACH debit in the United States, Bacs in the UK and similar schemes elsewhere run on batch rails with settlement in one to several business days. It suits subscriptions, invoices and instalments; its weakness is the return: the payer can have a debit reversed for weeks after it settled.
How it works
The mandate carries the payer’s account, the merchant’s creditor identifier and the payer’s consent; the merchant notifies the payer before each debit; the debit is submitted days in advance; the bank returns it if the account is closed, the funds are missing or the payer refuses. For SEPA the payer may return an authorised debit within eight weeks without a reason, and an unauthorised one within thirteen months.
Where it fits
Low-cost recurring payments with amounts that change, in markets where cards are not the habit for bills: utilities, insurance, memberships, software billed by invoice. For a payment business the return risk is managed like chargebacks: limits, reserves and a watch on return rates.
On the platform
Tranzify treats direct debit as a method of the providers that offer it in the catalogue: mandates and debits run through the provider, the platform records each debit, return and settlement in the journal and the ledger, and reports returns per merchant.
Updated: 2026-11-08