

Direct Debit API for 1%; max £2 - alexchamberlain
https://gocardless.com/

======
icebraining
I don't get why the US and UK rely so much on payment methods that rely on the
secrecy of some unique codes, that you have to trust every payee to secure.
Seems backwards to me.

Here in Portugal we have both direct debits and "service payments" (for one-
off stuff), and in both cases the payee is the one telling the bank about the
payment (usually on the bank's website or an ATM). There are codes involved
(the merchant's), but since they can only be used to transfer money _to_ them,
they don't have to be secured.

~~~
smackfu
What secret code are you referring to? To do a direct ACH transfer to someone,
you need only an account #, and that's not a secret since it's on every check
you give out.

~~~
misterbwong
Is this also true the other way around? Seems like security can be lax when
depositing to an account but should be much more strict debiting _from_ an
account.

~~~
alexchamberlain
You have to be registered to carry out direct debits, as well as supplying
details such as address.

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brador
Questions:

What shows on the bank statement?

Is collective payment taken once a month or on a per transaction?

When using a credit card, having a keylogger trojan on my comp is a minor
deal. if I'm entering my bank details, it becomes huge. Am I covered?

The UK is one of the financial scam hotspots of the world. CS told a family
member it's why BB left the UK. This after the family member had an order for
£5,000 worth of iMacs cancelled repeatedly for no apparent reason (even after
confirming three times with the CC company that the card was okay to go
ahead).

I hope you're ready. There is a huge demand for a solid payment solution
though, so if you hit it right, you're on to an easy exit.

~~~
hirokitakeuchi
Hey Brador, I'm one of the founders at GoCardless.

Consumers are covered - Direct Debits come with a very strong consumer
guarantee. You can find out more about it here:
[http://www.thesmartwaytopay.co.uk/directdebitexplained/pages...](http://www.thesmartwaytopay.co.uk/directdebitexplained/pages/directdebitguarantee.aspx)

~~~
nodata
Brador, can you answer his other two questions?

~~~
hirokitakeuchi
Sorry - missed the other questions:

What shows on the bank statement? \- GoCardless shows up on the bank statement

Is collective payment taken once a month or on a per transaction? \- We take a
payment for each transaction. This makes it clearer for payers and merchants
get their money quicker.

~~~
vizzah
Few more questions: \- How merchants are protected against fraudulent
chargebacks? \- How refunds are handled?

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krmmalik
I always love to see innovation in the payment space. In the grand scheme of
things, there was very little innovation until PayPal arrived, but there has
been very little innovation post-Paypal arrival as well (compared to
improvements in other areas).

My biggest worry with something like this is that small companies in the
financial space can be here one minute, and gone the next.

I wonder what these guys are doing to establish their credibility and
safeguard their future prospects as well as for their customers.

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richardburton
This is fantastic. Payments are still _so_ shit across the world. I have a lot
of respect for startups that try and take on the task of changing them for the
better.

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sborsje
Isn't this the exact same thing guys like Adyen have been doing for several
years?
([https://support.adyen.com/index.php?_m=knowledgebase&_a=...](https://support.adyen.com/index.php?_m=knowledgebase&_a=viewarticle&kbarticleid=9))
Or am I missing the point here?

~~~
alexchamberlain
Adyen don't look very professional.

~~~
sborsje
I agree that the site doesn't look great, but their platform works pretty good
(well, apart from the abysmal SOAP API) and they offer support for lots of
different payment methods (including direct debit, in lots of countries). So I
truly don't understand why everybody is suddenly getting so excited about
direct debit payments?

~~~
matthewking
When your customers money and your businesses reputation are at stake trust is
a huge issue. The website doesn't look great and gives hardly any information
on the services.

I'm sure if they smartened up their website and offered a REST API they'd be
in a much better position for web based startups to consider them, otherwise
I'm left searching for signs that its a professional and trustworthy company
to try and balance my initial impression.

~~~
sborsje
Don't get me wrong, I totally agree with you on the design part.

But what I'm trying to figure out is if design and a REST API are the only 2
things where GoCardless outexecutes competitors. Especially since direct debit
clearly isn't something new and there are other players in the field that
offer a much broader support for different kinds of payment methods.

~~~
matthewking
Id guess so yes but also market reach. I have a UK business and currently our
customers are manually transferring money to us every quarter because I
couldn't find a simple, easy and cost effective way to retrieve payments.

I hadn't come across Adyen until you mentioned them here.

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6ren
> Currently we are UK-only. We will be rolling out internationally soon.

~~~
alexchamberlain
I don't think this is a bad thing - there are plenty of British only websites,
and IMHO, too many US-only payment solutions.

~~~
mattmanser
Far, far too many.

If they've done this right then this is excellent! This has been such an
obvious gap in the market too, I'm glad someone's tackling it.

~~~
hirokitakeuchi
Thanks mattmanser.

Hopefully you'll like our implementation. We are working hard to make sure
it's done right.

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eliaskg
This seems to be e really strong competitor to stripe.com. But what all these
services are lacking at the moment is international support.

~~~
matthewking
Doesn't look like you can make payment requests via the API without sending
the card owner to the gocardless site first.

Our need is to be able to take a customers card details, store it with a
provider (and get an auth code) and then bill that card via an API. Hopefully
they'll expand on their current offering soon, UK businesses really need more
options in this market.

~~~
alexchamberlain
GoCardless don't charge cards... they take Direct Debits.

~~~
matthewking
You're right, I've let that go straight over my head.

It's the same deal though at the end of the day, as a business I want to take
payments from my customers without hassling them to make manual transfers.

So an id for cc details is the same as bank details from my end providing I
can request payments for flexible amounts.

Service providers in the UK seem to be able to change the amount I pay on
direct debit agreements without anything further from me, so I assume its all
possible on the banking side.

~~~
justincormack
Looking at the API, if you have the agreement set up you can make charges up
to a maximum limit (that you can see) without further customer interaction. If
you need to interact with the customer there are different API calls, eg to
increase limit, get initial agreement.

~~~
matthewking
Interesting, thanks for pointing that out.

So id have to get the customer to agree to authorise an amount larger than
their current subscription fee so that it has scope to cover upgrades and
extra services - something doesn't quite feel right there, maybe I'm
approaching it completely wrong.

~~~
justincormack
It appears so from this example, where there is a usage based fee

<https://gocardless.com/docs/api_guide#pre-authorization>

I can't see any guidelines about how you are recommended to approach these
types of situation. In some ways pre-setting a max limit is nice for the
customer if you warn them when they approach. I know people who have been
billed huge amounts on AWS without really realizing. SO long as you hand hold
the customer and your pricing model is simple to understand you should be able
to make it work out I would think. For upgrades there is probably no reason
not to get explicit agreement (presuming it is just a checkbox really, no need
to give the acount details again after all), it is variable usage that is more
complex I would think.

~~~
matthewking
If we are able to provide some blurb on the form then it can probably be
explained adequately to alleviate any of the customers concerns, on the other
hand if they just see a form asking for authorisation to take an amount over
their standard subscription it probably won't work.

I agree that subscriptions could change if they just have to tick a box and
not provide all their details again, it's just that in our case we often
provide a small variable number of one off add-on services to each customer
over a month which we'd ideally not have to ask them to pay for seperately.

I've signed up for their beta though and sent them an email, hopeful that its
workable. If they can do what we need id be a very happy man.

~~~
hirokitakeuchi
You can pass in information to display on the checkout pages. We can
definitely help you with any kind of variable billing. You can come and chat
with us at:

<https://gocardless.campfirenow.com/3ae88>

[edited link]

~~~
matthewking
Thanks, sounding good so far, just need to get an account so I can test it out
:)

The campfire channel seems to be non public?

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balac
Its a great idea, but will customers really be comfortable providing websites
with their bank details in order to make a single purchase?

~~~
eis
This is how a lot of payments are conducted in Germany. It's easy and secure
for the customer as he can reverse fraudulent charges.

What makes this different than providing websites with your credit card
details?

~~~
blibble
liability in the UK is different: credit card transactions are heavily
protected (you're guaranteed to get your money back), whereas direct bank
transfers are vastly less protected (with the exception of direct debits).

can you even have a one-off direct debit? I didn't think the system was really
designed for that.

~~~
hirokitakeuchi
This is a common misconception about direct debits. Direct debits can be used
to charge people varying amounts at varying frequencies (including one-offs).

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regularfry
The fact that this now exists means a back-burner project of mine has gone
overnight from "some day, maybe" to "GET IT BUILT ALREADY".

How long is the invitation-only period likely to last?

------
brador
At first I thought this was awesome. Then I realized I would never open my
bank account to anyone again after a Paypal incident.

Great price and I'm in on that, but the system needs work.

~~~
mseebach
What's _the_ Paypal incident?

~~~
brador
Just a personal incident. They took the cash out of a connected bank account
following the classic "I didn't receive the delivery" scam dispute where I was
the seller.

~~~
lisper
How does that scam work? Surely PayPal checks to make sure that a charge they
are reversing actually happened in the first place?

~~~
brador
Buyer gets the delivery, then claims they didn't. It's then buyers word
against sellers (this was before the new system of protection for sellers if
they post to the Paypal registered address).

They then claim non-delivery. Next thing I know I'm out $300.

~~~
lisper
How do you know they got it? Did you send it in a way that they had to sign
for it? If so, would not serve as proof of delivery to prevent the chargeback?
And if not, how do you know that the customer is not telling the truth?

~~~
brador
The delivery came with a signature. They claimed it was not theirs. They also
had it delivered to what turned out to be a disused building, beside a car
park, in a ghetto.

I wrote it off as a lesson and closed my Paypal account that day.

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casca
This is a great product for the UK. Sadly, unless they get acquired quickly,
they'll get destroyed by fraud. The Direct Debit Guarantee means that as the
account-holder, I can tell the bank to give me my money back immediately, with
no reason. So a fraudster will make some charges, run away with the money and
GoCardless will be left holding the full liability.

This is one of the reasons that it's so painful to be allowed to process
Direct Debit transactions in the UK.

~~~
JonM
We've recently launched an Direct Debit facility and faced these exact
problems. Luckily our DD provider works with some huge companies and so is
already insured against any "indemnity claims". This insurance is reflected in
our transaction fees though.

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perino
Besides the fact that a direct debit payment is reversible, isn't there also a
timeout between the authorization and actual debit (in The Netherlands, I
believe it's about 1-2 days)?

How do they handle chargebacks/failed payments and do they charge their
merchants for failed payments/chargebacks?

I think direct debit could be huge on mobile, but given the fact that every
direct debit payment can be cancelled within a month or so, how do you reduce
your risks?

------
jentulman
This looks like great news. Hirokitakeuchi could you describe what the payment
flow would be like for me as a merchant if my customer has never encountered
GoCardless before? Until you gain some traction I'm wondering where
perceptions of trust on the part of my customer might be affected by their
interactions with GoCardless during a payment.

[edited for grammar]

~~~
hirokitakeuchi
Your customer pays through our hosted checkout pages.

We have found that a combination of the Direct Debit branding and the
merchant's branding help with customer trust.

~~~
jentulman
Thanks for your reply.

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mseebach
Awesome. I looked into doing this in Denmark about two years ago, but it fell
to "schlepp"-avoidance.

It's worth noting that PayPal already does exactly this, although I can see
the value in cutting them out of the loop.

~~~
alexchamberlain
How much do they charge you?

~~~
mseebach
About £0.50 per payment, regardless of size. Certainly quite affordable, I
chickened because the terms and conditions if you're handling payments for
others was grey area at best, and it was hard to determine what regulations
would apply for a cash-holding transaction-middleman.

They also only process direct debits monthly, and the payment needs to be
advised weeks in advance, so the debtor can object. Fine for recurring
memberships etc., not really suitable for one-off payments.

Finally, there's a deeply entrenched national debit-ish card, run by the same
nominally private sector entity running direct debits. They essentially write
their own rules for the entire sector in Denmark, and I wasn't really too keen
on going up against them. So perfect match for the schlepp-essay :)

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rayhano
Two questions:

1\. How quickly is the money in the merchant account after the payment is
authorised by the consumer?

2\. Is the Faster Payments system now the new standard? If so, what is the
difference between this and electronic Direct Debit and will you be porting
onto Faster Payments?

3\. What is next for GoCardless, apart from user (business) acquisition?

~~~
hirokitakeuchi
1\. We pay out on a 7 days after a transaction is initiated.

2\. Faster payments is the new standard for payments initiated from within a
bank account (e.g., via online banking). Direct Debit is still the standard
for "pull" based payments.

3\. Keep an eye out. We have some big announcements coming up.

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ashconnor
Although I like the idea aslong as banks charge anything up to £40.00 for a
failed direct debit I can't see it catching on. If there's not enough funds in
Paypal it will just bounce the payment with no charge (providing you aren't
funding your account with your bank account).

~~~
timthorn
Given that DD is a very well established service with high takeup, there is
evidence that the UK population is happy to use it. However, there may be an
issue with the public not trusting unknown companies to take payment this way.

------
guidupuy
What's with the £2 limit though? And what prevents me from splitting my
payments into several £2 chunks?

~~~
timruffles
£2 is the most you'll pay as a fee. 1% or £2, whichever is lower.

~~~
justincormack
I wonder if there is a minimum of 1p? Either way this is potentially
compelling for micropayment type solutions...

~~~
timthorn
Presumably the fee is on the aggregate payment, rather than individual
transactions.

Edit: Hmm, with a ceiling of £2 that doesn't make sense. Oh well.

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Uchikoma
Hope they come to Germany.

~~~
justincormack
They say in the FAQ they will cover all of EU soon...

~~~
Uchikoma
Thx

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alexchamberlain
What a fantastic idea!

