With the postage stamp letter rate now at one dollar it is not surprising that fewer firms are keen to send a monthly bill through the mail. Those who bill for the quantity of their merchandise used during each month - such as the electricity supplier or the gas provider - try and get their customer's agreement to billing by email. We are now seeing a hefty surcharge applied to " paper " bills still using the postal service and many suppliers also levy a fine for customers who fail to pay by the due date.
Increasingly, the only way to now access many services is to agree to their demand that payment be by way of the " direct debit " option. You sign an agreement whereby the payment for that service is automatically extracted from your bank account each month. The onus is on the customer to see that his or her bank balance is sufficient to allow those payments to take place on the due date.
We are also seeing a monthly option being applied to bills that fall due on an annual basis, such as home and contents insurance. Instead of shelling out the lump sum premium once a year we are now offered to reduce this to regular monthly payments - at no added cost - and those payments must be made by direct debit. This also applies to car insurance, and direct debit is the required method of topping up those automatic deposits we need to have in accounts from which services such as road tolls draw their charges. There can be a bewildering array of withdrawals to contemplate when we get each bank statement.
The charity industries have also shied away from asking for a cash donation in favour of soliciting ongoing monthly contributions. Often that is geared with the charity supplying regular information updates on an individual your contribution is sponsoring or progress on how a building project is progressing. The advantage for the charity is that these regular payments help with maintaining cash flow continuity.
The problem arises when you need to discontinue any of these direct debit payments. Perhaps you cancel your subscription to a pay TV service. What is unclear is whether the supplier automatically cancels that payment arrangement, or if that becomes your responsibility. In many cases that payment continues to disappear from your bank account for months after the supply has discontinued.
The banks are certainly unhelpful. They deliver a mixed message to enquiries. Some individual branches insist that the arrangement can only be cancelled by the merchant and sometimes less scrupulous traders are wilfully negligent in providing that service. It then becomes the responsibility of the customer to collect those over payments from the trader.
Where branches agree that discontinuation can be applied at the customers request it usually involves a direct visit to a branch and a signing of forms to bring it to reality. Mostly cancellation via a phone call is refused, despite the customer being able to supply the required ID to establish their identity.
Direct debit is no longer an unusual payment method applied only to a small range of services. It is fast becoming the only method of payment that will be accepted for the majority of commercial services and that cancellation option needs to be covered bylaw.
Clearly, like all payments the option rests in the hands of the person paying the bill. If they stop making the payments the trader has the right to terminate supply of the service and we need a law to specifically make that clear to the banks. It is after all little different to signing a cheque to pay for that service. Direct debit is simply a theoretical cheque that the bank cashes each month when it makes that payment on its customers behalf. Continuation is always at the discretion of the bank's customer !
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