Blink and you could be forgiven for thinking that “Direct Debit” and “Direct Credit” are one and the same. Not only do they look and sound alike, they are both Bacs payments. Yet in truth, Direct Debits and Direct Credits are fundamentally different and serve distinct purposes.

In this article, we’ll address the differences between the two and provide example scenarios of where they should be used.

Direct Debit Vs Direct Credit

direct debit vs direct credit
In simple terms the difference between Direct Debit and Direct Credit breaks down to this:

Direct Debits are payments into a business (money in)
Direct Credits are used by businesses to make a payment (money out)

For example, many gyms, clubs and care homes use Direct Debit to collect regular or recurring payments from their clients. By comparison, 150,000 organisations in the UK use Direct Credit to pay staff salaries.

Is Direct Debit and Direct Credit the same?

No. Hopefully by now, you can see that Direct Debits and Direct Credit should not be confused. Think of the difference this way also: a Direct Debit is automated electronic withdrawal; a Direct Credit is an automated electronic deposit. The functions they perform are polar opposites.

What are Direct Credit Payments?

direct credit payments
As highlighted by the earlier example, Direct Credit payments are a simple and secure way to make business payments. It is the most popular method to pay staff wages and salaries; 90% of the UK workforce gets paid this way. And it’s easy to see why. Direct Credit brings direct time and efficiency savings; cutting down on the admin workload whilst giving businesses full control over their cash flow.

Here, at FastPay we offer a Direct Credit Payment service as part of our Bureau Service. We enable businesses to transfer funds for wages, pensions, employee expenses, dividends and insurance settlements to a payees’ account quickly and reliably. In summary, Bacs Direct Credit is the perfect solution for anyone with their own Service User Number (SUN) to make payments.

Should I use Direct Debit or Direct Credit?

The answer to this question is entirely situation dependent.

If you collect regular payments that are of a set fee then Direct Debit provides the best fit, offering convenience for you and the customer as well as reducing the risk of late payment. Similarly, Direct Debit is great for collecting variable amounts and even one-off payments.

If you want to pay staff wages automatically then Direct Credit will enable you to do just that. When it comes to paying monthly business bills such as supplier invoices, Direct Credit can also be used here to help control payments, although Direct Debit could also be used in this instance.

FastPay Bacs Payment solutions

Direct Debit or Direct Credit? The experienced team at Fastpay Ltd can help you to choose the Bacs payment solution that is right for you and your organisational needs. Every year we help businesses, clubs and charities, from sole traders through to large enterprises take control of their cash flow.

Find out how we can help you by calling 0161 737 5290.

Additionally, you can request a quote or get more information about our services by completing our contact form.


Free Resource Download! Direct Debit: A Beginners Guide Here we'll explain how to use Direct Debit to manage your business' regular payments in a simple and easy to understand guide. Download your free copy