Businesses are losing a fortune from over-complicated direct debit set-up procedures, research has found.
Redshift Research, on behalf of cloud-payment systems firm Bottomline Technologies, has found that almost a quarter of UK individuals (23 percent) have experienced a problem setting up or amending a direct debit or direct credit (DC) in the last 12 months.
And Redshift said 14 percent of consumers have cancelled a policy or subscription because the debit set-up process "was too complicated". With almost 6 billion payments processed every year, and each failed transaction worth around £50, said Redshift, this represents a significant loss in revenues and customers for UK businesses.
For the research Redshift questioned 200 UK financial decision makers and 1,100 UK adults. It found that 95 percent of failed transactions were due to human error, with 71 percent of finance departments citing errors with either the bank account number or the sort code as the most common reason for transactions failing.
Whilst 71 percent of businesses recognise that failed transactions damage customer relations, businesses also need to take into account the significant cost of each failed transaction. As many as 60 percent of businesses admit incurring a cost of £50 or more for every failed direct debit transaction, whilst 43 percent of finance departments spend more than four hours a month, and 11 percent spend more than 10 hours each month fixing problems with DD transactions.
The survey also found that fraudulent activity is the most time-consuming error that finance departments experience (28 percent), with sort code errors and bank account number errors ranking as second and third, respectively.
Surprisingly six percent of consumers admitted to intentionally completing a DD mandate incorrectly, with 45 percent of these respondents deliberately using the wrong bank account number, and a third of these putting the wrong sort code or address details down.
Jim Conning, payments director at Bottomline Technologies, said: "The key is not only to check that a bank account and sort code are matched and valid, but also to verify the account information in real-time, so that errors can be resolved there and then at point of entry. With this combined approach companies are protected from deliberate fraud and inadvertent error."