In the early hours of Saturday, David was in dire need of an emergency fund. He thought it wise to borrow from a lending platform. Although it wasn’t a lot of money, it was a quick fix at the time. Despite their reminders via text, email, and phone call for a refund, he pushed it aside, waiting until later to take the necessary action. Life got busy, and David forgot. 

One day, David didn't get a knock; he got a quiet kind of sanction. His younger sister stumbled upon a printed final loan notice addressed to him, which he had left on their dining table. The shame wasn't loud or public, but it was a quiet embarrassment. 

That's the thing about money owed: it often shows up at the worst time. And the recovery process? It has a way of stretching you thin.

And while this happens in the loan industry, the same tension is evident in other sectors that rely on recurring payments.

Here, two things are involved. One, the customer, who is only human, can get caught up in the realities of adulthood and may either forget or deliberately procrastinate until they deem it fit to pay off their debt. Two, the merchant is left chasing under pressure or losing money.

Other businesses that fall into the category of handling recurring payments include subscription services or utility companies. Unfortunately, the challenges of recurring payments often haunt these businesses, but not when Monnify Direct Debit is involved. 

First, What is Direct Debit 

Direct debit is a simplified payment option that businesses use to collect payments promptly and efficiently. Unlike other payment methods that allow for manual collection (e.g., when a customer makes a transfer), direct debit is an automated payment process that helps businesses collect payments from their customers' bank accounts with their authorisation, providing both parties with peace of mind.

Monnify's Direct Debit helps merchants automatically debit a customer for recurring payments (subscriptions, repayments, or instalments) directly from their bank account, based on a pre-authorised mandate. Customers give the go-ahead by completing a bank's specific request, ensuring security and compliance. 

Merchants no longer have to worry about expired or cancelled bank cards linked to their platforms. This payment method allows merchants to collect payments from customers' bank accounts across all banks in Nigeria.

Benefits of Direct Debit for Customers and Merchants 

Nobody sets up a business with the aim of begging customers to pay back or renew their payments every time. As a business owner, wouldn't you instead go for the money that comes with peace, rather than pressure? If your answer is the former, here are the reasons why you need a payment collection method without reminders.

1. It simplifies billing and improves cash flow: When your payments arrive on time, business operations run smoothly due to steady revenue. No hiccups or delays that can affect the growth of your business. 
2. Minimises defaults and ensures timely payments: You experience little or no failed payments because you no longer have to deal with expired or cancelled debit cards, when your payments are automated directly from their bank accounts.
3. Goodbye to manual payment collection: You no longer have to rely on customers to transfer funds manually. Once the customer gives their one-time approval, payment is automatically processed.  
4. Peace of mind: The merchant and customer can now enjoy the convenience that comes with no manual or constant reminders, late renewals and operational overhead cost. This automation process boosts customer loyalty and satisfaction.

How Monnify Direct Debit Can Work for Your Business 

Monnify offers four flexible debit mandate types to suit diverse business needs.

• The Open and Flexible Mandate: This is for businesses that don't have a predetermined end date for bill payment. It is based solely on the consumption of the service or product. For example, IKEDC or a Telcoms company can use this mandate for postpaid customers. They debit their account based on their monthly usage. This mandate can continue indefinitely until cancelled.
• The Open and Fixed Mandate: This applies to businesses that charge a monthly subscription or recurring fee. E.g. Fitness and wellness companies, e-commerce, streaming platforms, e.t.c. They offer services with fixed amounts, but without an end date. The customer gets debited every month until they choose to cancel their subscription. 
• The Closed and Flexible Mandate: It is perfect for businesses that offer flexible instalment payment plans, but with a predetermined end date. A loan company or a car dealership, for example, can provide a 12-month instalment plan that debits variable payments, allowing the customer to meet the full payment by the end date. 
• The Closed and Fixed Mandate: This is the opposite of the closed and flexible mandate. Although the payment plan has a predetermined end date, the amount payable remains fixed. e.g an insurance company collects N10,000 monthly as a premium fee for a one-year health plan. After 12 months, the customers' mandate expires. An educational institution or a leasing or real estate company can utilise this mandate. 

How Monnify Direct Debit Payment Works 

Now that you understand what’s in it for your business and your customers, below is a diagram of how this feature works. 

How to Set Up Monnify Direct Debit in Minutes 

Setting up Monnify Direct Debit is straightforward. Below are the four significant steps to follow.  

1. Sign up with Monnify at app.monnify.com
2. Copy your Api and Secret keys from the Developer Section of the Dashboard
3. Integrate Monnify APIs
4. Test in Sandbox 
5. Go live🚀, and you can start collecting direct debit payments after your customer's authorisation. 

For a step-by-step flow, click this API documentation to guide you through the process in detail. 

In closing, collecting your recurrent payments doesn’t have to come with sleepless nights, stalking your customers or bullying them to pay up with awkward reminders. 

Monnify Direct Debit guarantees you and your customers peace of mind, taking away the pressure of unstable revenue from your business. Don’t let your customers be like David, and your business like the loan app.

To activate Monnify Direct Debit, visit app.monnify.com to sign up, explore the API documentation, or contact [email protected], or chat with us on WhatsApp, +2349087797899 to help you get started.