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The use of cash and cheques for repetitive payments such as paying for items bought on hire-purchase, insurance premiums and mortgage repayments has been described as less efficient. It can be very cumbersome and create reconciliation as well as cash management challenges.
A more efficient way of making these payments is through the Direct Debit electronic payment option, experts have noted. The Automated Clearing House (ACH) Direct Debit enables a specific amount to be paid or received at an agreed date electronically. It would, therefore, be a better option, particularly, for companies which receive these repetitive or recurring payments.
Archie Hesse, the Chief Executive Officer of Ghana Interbank Payment and Settlement Systems (GhIPSS), agreed with this assertion.
He noted that Direct Debit, which is offered by banks, can also be used for other repetitive payments such as utility bills, fixed subscriptions for gyms, magazines, pay-TV and association membership dues among others. He explained that the customer only needs to fill a Direct Debit form at a bank that will authorise the companies or institutions they need to make these regular payments to, to receive the stated amount from his or her bank account on specific dates.
The obvious advantage of Direct Debit is that it allows such recurring payments to be made automatically on the due date. It is also safe, convenient and cost-effective for users, as it takes away the hassle of having to make such payments every time they are due.
A number of companies continue to receive cheques for repetitive payments. This creates a lot of challenges trying to sort out the various cheques and ensuring that they are presented on the due dates. Safekeeping for the cheques until their due date is also another challenge, as some could be defaced or get missing. Mr. Hesse advised these companies to rather encourage their customers to use the ACH Direct Debit. He said Direct Debit is better than receiving post-dated cheques and cash.
“It’s too cumbersome to collect cheques – particularly post-dated cheques – and be checking each time to see which one is due, when a simple mandate would ensure the money is paid to you automatically on the date you agree with the customer…it’s that simple,” Mr. Hesse stated. He, therefore, urged companies and individuals to speak with their banks to help them use ACH Direct Debit to enhance efficiency of their work.
Mr. Hesse said GhIPSS will continue to educate the public about Direct Debit, and encouraged banks to use every opportunity to inform their clients about it.
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