What is more convenient: using a card or direct debit? This is a very recurring question when we talk about making payment collections. The answer, like everything else, is that it depends on the case. Alberto Molpeceres, founder of Besepa –Docuten‘s accounts receivable platform–, explains in this video the differences between the two methods, and when it would be better to use one or the other.
Recurring charges, depend on the type of client and on the type of product, the payment method that works best is one or the other. For example, if it is an internet service focused on individuals or focused on an internet service provider where it is customary to have a card, charging by card has the matter of speed, it is reliable, because you know at the precise moment whether you have been charged or not and besides, if it is an online service, like Netflix, it is very easy to see when: “ there’s an incidence. If you don’t solve it, I’ll cut you off.” What’s going on? Although it doesn’t seem like it, cards have many more incidents than a bank account because for example they expire, they are lost, etc. A bank account, if you take into account your personal bank account, you are more likely to keep your bank account for much longer. Sometimes you change banks, or whatever, but you keep it longer. Not to mention if you have a mortgage. So, there are other types of recurring charges where the bank account makes a lot more sense. First because the payment collection cycle can be longer. For example, if you are going to charge each year you can register a bank card and after 15 days it has expired, and it is no longer valid. And a year later you have to sell that same option back to the clients.
There are things, like a gym that, although they make attempts, they will hardly opt for the card payment possibility. The other important reason is that not all companies have the possibility to use cards. If your client is a bar, an accountancy firm, a law firm… there’s usually no card payment possibility. The card belongs to the owner, the partner, etc. so that kind of client normally works better with direct debit.
If after this video you still have doubts about what to use with your clients, contact us and we will advise you.
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