Direct debit dishonours

A direct debit dishonour occurs when a scheduled payment cannot be processed from a customer’s bank account.

An unsuccessful direct debit can occur for several reasons, such as insufficient funds in the account, incorrect or outdated account details, or the customer or their financial institution cancelling the direct debit authority. When a dishonour occurs, the payment is not received and may result in additional fees or the account becoming overdue.

After a set number of unsuccessful direct debit retry attempts, the customer's direct debit arrangement will be stopped.  The customer will then be issued with a dishonoured payment notice each time the attempt has failed. The direct debit is still in place and will continue to debit future payments.

Note: The number of direct debit retry attempts can be configured according to your business rules.

After a predefined number of consecutive unsuccessful direct debit attempts, the customer's direct debit arrangement will be cancelled. The customer will then be issued a Direct Debit Cancellation Notice, and automatic payments will no longer be attempted until the authority is reinstated or an alternative payment method is arranged.

Note: The number of consecutive failed attempts can be configured to your business rules.

Example:

Business rule

1. Attempt 3 times to debit funds.
2. If 2 consecutive direct debits fail, cancel the direct debit.

Customer A:

Month 1

1. The monthly direct debit failed (dishonoured payment notice issued).
2. Direct debit retired and failed 2 more times. (dishonoured payment notice issued each time).

Month 2

1. Direct debt processed.

Customer B:

Month 1

1. The monthly direct debit failed (dishonoured payment notice issued).
2. Direct debit retired and failed 2 more times. (dishonoured payment notice issued each time).

Month 2

1. The monthly direct debit failed (dishonoured payment notice issued).
2. Direct debit retired and failed 2 more times. (dishonoured payment notice issued each time).
3. Direct debit cancelled.