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Australians are embracing automatic account payments but we should do so with caution, writes
SET-and-forget direct debit payments are rising but Australians are being warned to check what payments are going out of their accounts.
The Australian Payments and Clearing Association’s latest figures show in 2013 more than 2.4 million direct debit payments are made every day – almost doubling in the past 10 years from 1.3 million in 2003.
On average, $19.2 billion is automatically transferred from Australians’ accounts daily, up from $8.6 billion in 2003.
APCA chief executive Chris Hamilton says direct debit payments – a service that allows a provider to automatically withdraw money for a customer’s account at set times – is a reliable and prompt payment method and he expects its use will continue to increase.
“Direct debits are never the only payment option, if you want to control your finances and pay when you want to pay then you can always have an option that does that, like using BPAY or a card,’’ he says.
“I think direct debits are going to continue doing what they are doing now, which is steadily increasing at a little bit above the general rate of economic expansion in Australia and it’s gradually being used by more people.”
ING Direct’s manager of everyday banking, Tim Newman, says merchants are encouraging more Australians to set up automatic payments.
“From the merchant’s perspective, it gives them more certainty over the payment because you are not relying on someone to do something every month or quarter,’’ he says.
“In some cases you are seeing some merchants and utility providers offering a discount or a different pricing plan if the customer sets up a direct debit.”
Newman says it is important customers keep on top of their direct debits.
“Keep an eye on your accounts and be aware of what’s coming out of your account,’’ he says. “You need to know when and how much money you have in your account, so you don’t have those instances where you miss a payment and potentially occur fees on both sides.”
A MoneySmart spokesman says direct debiting “reduces the hassle factor” when paying bills but warns people will get hit if there isn’t enough money in their account.
“People are becoming more comfortable with electronic banking rather than taking a bill down to the post office,’’ he says.
“Direct debit works best where it’s a regular predictable amount and you can afford to leave a cushion in your account, so even if you don’t remember exactly when a bill comes in it’s not going to bounce.”