Direct Debit – part of the move towards a cashless society

The chief executive of Visa Europe has predicted that by 2012, paying for goods with notes and coins could be consigned to history, once and for all. And let’s face it, it can’t come too soon!

Already we have seen subtle movements towards a cashless society as first pound notes were replaced with one pound and two pound coins, increasing the flexibility of using this level of currency in more automated environments. Then we saw the demise of the pointless half pence coin and I’m sure before long there will be agreement on retail pricing levels at, for example, £14.95 instead of £14.99, to remove the need for anything smaller than the already irritating 5 pence coin.

So how do Direct Debits fit into this scenario? Well already the standing order is becoming a vehicle of the past as the efficiency and flexibility of direct debits becomes recognised by the widest possible business and consumer audience. The fact that almost all businesses can now collect payments using direct debits, either under a Direct Debit Facilities Management Scheme or by using a Direct Debit Bureau Service means that the exclusivity of adding this process to your Sales Ledger Management arsenal has all but disappeared.

And who remembers cheques? Well there is another instrument about to bite the dust. It’s 350 years since someone first ‘promised to pay’ Messrs Morris and Clayton 400 pounds only, on the first ever cheque issued, but this financial dodo is also heading for extinction as we use direct debits to cover our household and business regular payments and a variety of cards to make both business and retail payments, on and offline.

For some of us who grew up working in clearing banks, where cash and the cheque were kings, 2012 may be a sad day. The prediction for cheques is that only 3% of all transactions will involve a cheque at the same time as the man from Visa predicts the disappearance of cash. Is this fantasy – well already the Netherlands is a cheque free society and the value of transactions conducted by cheque in the UK is less than 3% of the value of transactions involving a debit or credit card, or cash.

Whether it happens in day to day private life, we all know that business payments have changed for ever and for the better. Yes we have a vested interest in saying it, but there is no doubt that the burgeoning popularity of direct debits as principal form of business payment is here to stay because of convenience, flexibility, cashflow advantage and security.