Direct Debit

Payments via Direct Debit are supported by BitFolk through the payment provider GoCardless.

What

Direct Debit is a broad name for any payment method whereby a payee (e.g., BitFolk) can request a direct transfer of funds from the bank account of a payer (e.g., you). In the United Kingdom, Direct Debit is the name of a specific banking feature and that's what this article is about.

BitFolk is using the third party GoCardless as a service provider to carry out the transactions on its behalf, in a similar way to how Paypal or Google Wallet may be used.

Who can use it

Requirements for using Direct Debit as a payment method to BitFolk:

• You must hold a UK bank account denominated in British Pounds (£)
• Your bank account must be enabled for Direct Debits by your bank (most current accounts are)

Why you might want to use Direct Debit to pay BitFolk

• Your payments will be automated.

You'll follow a link to GoCardless from your BitFolk Panel account to authorise Direct Debit payments to BitFolk. After you complete this simple process, BitFolk will be able to charge invoices to your bank account without you needing to take any further action. If you prefer to manually approve each invoice then you can disable automatic payment.

• Your account credit will be put to use sooner.

BitFolk can request a variable amount, so will always request the correct invoice amount after deducting any account credit.

At the moment customers paying with a standing order or PayPal subscription send BitFolk a fixed amount each period, which means that those of you who regularly accumulate service credit through referrals never get to use that credit.

• Direct Debit offers you great peace of mind.

The UK's Direct Debit guarantee is one of the strongest in the world. If for some reason BitFolk should become uncontactable, customers can always cancel Direct Debit instructions and reverse Debits that have already gone out, just by talking to their bank.

• No more PayPal.

Some people dislike using PayPal.

Why BitFolk wants you to use Direct Debit if possible

• It's a lot cheaper than PayPal.

On a typical £10.79 per month transaction PayPal charges £0.51 in fees. GoCardless charges £0.20. At the moment BitFolk eats all the transaction fees, so would really prefer them to be as small as possible.

• GoCardless are easy to work with, and are based locally (London).

Their API is actually quite nice to use and they are very responsive to support queries and suggestions. Unlike PayPal which are almost entirely useless unless you like being told to clear your cookies in response to almost every single query.

• The customer can't stop paying without cancelling their Direct Debit

This will avoid the situation where a customer stops responding to all contact leaving BitFolk unsure whether to suspend their service.

• Paying for upgrades will be simpler.

At the moment when a customer upgrades their service they usually end up having to make a small one-off payment for the pro rata price difference between their old service and their new one, as well as sort out the new recurring payment (change standing order or set up new PayPal subscription).

Using GoCardless, both the pro rata payment and the future larger payments can go through the same Direct Debit mandate.

Current status

Now implemented and pushed live:

• Setting up a mandate, with or without automated payments.
• Payment of a one-off invoice or bundle of invoices

Initial integration in December was against the v1 API which is now referred to as legacy. A rewrite against the new "Pro API" was done in September 2017.

How to switch

You can set up a Direct Debit mandate from your Panel account. If you already have a PayPal subscription then it won't let you do that until BitFolk have cancelled that for you, so ask support in that case.

Legacy Integration

BitFolk has been using GoCardless since December 2012. In September 2017 BitFolk switched over to GoCardless's "Pro" API because the v1 API was deprecated and due to be disabled in October 2017. BitFolk held off on the switch as long as possible because the Pro API did not bring any new features of interest to BitFolk customers, and the minimum transaction fee went up to £0.20 (previously there was no minimum). It was only the impending removal of the v1 ("Legacy") API that forced a change.

The Pro API dropped support for mandates with a capped maximum charge per period, e.g. £10.79 per month. All of the mandates BitFolk created using the legacy API had a capped maximum amount per period that matched your regular VPS bill. There is backwards compatibility between the two APIs, so BitFolk can still put charges through your legacy mandates without requiring you to cancel and re-authorise, but the Pro API has no way to query the details of the capped amount. This means that BitFolk cannot check if it will be possible to put a charge through without actually doing it.

Most of the time this does not matter: the only charges made are the ones for your regular VPS bill, which fall within the legacy limits and succeed. There are situations though where the cap will be exceeded, and in those cases BitFolk is unable to tell exactly which limit has been exceeded. The error response from the API is the same both for charging you too soon and also for charging you too much.

Previously, where it could be seen that the charge would succeed if retried in a couple of days, BitFolk just did that. It was only where it could be seen that the charge would never succeed (because the charge was always going to be above the limit, generally due to an upgrade) that BitFolk would need to cancel your mandate and ask you to re-authorise.

Since BitFolk can no longer tell if a charge will ever succeed, if charges fail due to legacy limits then BitFolk will unfortunately need to cancel your mandate and ask you to re-authorise. You can do this yourself by using the "Cancel Direct Debit" button on the Panel.

A plea regarding fees

With the legacy API the fees were 1% capped at £2.00. So, minimum £0.01 and maximum £2.00.

With the new Pro API the minimum fee is £0.20. This is bad news for BitFolk as the median payment is around £22 but the mode (most common) is £10.79. A significant number of BitFolk's transactions are going to attract a fee much higher than 1% and as with all the other payment methods, BitFolk is swallowing the transaction fees.

If you currently pay by Direct Debit and your regular bill is currently less than £20 and you want to help out, there are two things you could do which won't cost you anything extra.

• You could switch to quarterly or yearly payments

As even the smallest plan costs more than £20 quarterly, that brings the fees back down to 1%.

• You could agree to let BitFolk take a minimum payment of £20

Whatever extra BitFolk charged you would be credited to your account as a pre-payment, deducted from future invoices and given back to you should you quit the service. In effect you would be agreeing to lend BitFolk up to £19.99, with instant payback.

If you'd be willing to do either of those, please contact Support.

If you'd rather not do either of those that's fine—thanks for using Direct Debit anyway; it's still cheaper than Paypal or Stripe!

Frequently asked questions

What will appear on my bank statements?

You'll see GoCardless and a reference number.

If I allow BitFolk to take Direct Debits from my bank account, what stops you emptying my account and flying to Bermuda?

Ultimately the Direct Debit guarantee means that if you tell your bank that a payment was not authorised, they give you your money back immediately.

Practically speaking, GoCardless makes clear what any request will do by sending you an email at least 3 days before any charge takes place.

In addition, GoCardless hold funds for a week before passing them on to BitFolk.

In event of a dispute BitFolk would really appreciate if you would contact Support first as this tends to be simpler and faster for all concerned, but the Direct Debit guarantee means that your own bank will always reverse charges for you without question, if that is necessary.

Why doesn't BitFolk do Direct Debit by itself without GoCardless being involved?

BitFolk's bank (Barclays) are not interested in enabling this because they say BitFolk is too small. A few different third party Direct Debit providers have been looked at, and GoCardless seems to be the nicest one around at the moment.

What information will GoCardless want from me?

They will need to know:

• Your name.
• An email address (to which they will only send notifications about your payments).
• Your bank account's sort code and account number.
• The postal address you gave to your bank.

What information does GoCardless share with BitFolk?

Obviously apart from all the details of your payments to BitFolk, BitFolk is provided with your name and email address. Apart from the last two digits of your bank account and the name of your bank, BitFolk does not get to see your bank details.

Why not just implement a credit card gateway that allows continuous authority?

This will be done eventually, but most BitFolk customers do have a UK bank account and Direct Debit is superior to credit card continuous authority. Credit card processing is quite expensive and continuous authority isn't very consumer-friendly.

BitFolk has made a mistake with a Direct Debit. Who do I talk to?

Please talk to BitFolk first. You most likely only need to contact GoCardless or your bank in an emergency.

I have a UK bank account but I live outside UK. Can I still use Direct Debit?

If your bank participates in Bacs (this is the UK's payment system so all UK banks do) and your account is denominated in £ (GBP) then you should be able to use this. You may encounter a problem where GoCardless doesn't accept a non-UK postal address. This is a known issue and in these cases GoCardless have advised that you can provide the postal address of your bank instead.

I heard GoCardless supports € (EUR) payments. Why don't you?

It's true that the new Pro API allows charges in EUR and SEK, but in order to do this BitFolk must bill you in those currencies and accept bank deposits in those currencies. At the moment BitFolk runs entirely in GBP and doesn't want to change that. BitFolk will instead implement continuous credit card authority to take automated payments that way.