A: A direct debit is a regular automatic payment set up on your account using your BSB and account number. When you set up a direct debit using your BSB and account number, it allows a merchant or service provider to withdraw an agreed amount of money from your account into a merchant’s or service provider’s account at set times. For example, to pay for a service, bills, the gym, or to make repayments on your home loan.
The merchant will provide you with a Direct Debit Request (DDR) Service Agreement for you to complete and sign to provide them with this authority.
A recurring payment is a regular automatic payment set up from your debit or credit card with a merchant or service provider. To do this, you’ll need to arrange a Recurring Payment Authority (RPA) and give the merchant or service provider your card number, expiry date and 3-digit CVV number on the back of your card. This allows the merchant or service provider to charge your debit or credit card.
It is important to ensure you have enough funds in your bank account prior to the direct debit or a recurring payment being processed to avoid any dishonour or overdraft fees.