Direct Debit Failure Rate Rises By 14% in the Last 12 Months

The total Direct Debit failure rate in August 2023 has increased by 14% compared to August 2022.

The brand-new data has come from Pay.UK and Vocalink are part of a new monthly real-time indicator tracking Direct Debit average transactions and failure rates.

According to official sources, the UK economy shrank more than expected in July, contracting by 0.5%, aided in no small part by union action, strikes, and a summer plagued by bad weather.

Consumer behaviour indicators are generally showing decreased activity in the latest week. For example, Revolut debit card spending fell by 11% points when compared with the previous week, with a notable 21% point call in “Automotive fuel” spending.

“As a leading life insurance broker, we oversee thousands of UK direct debits. We are seeing a significant increase in direct debits bouncing, not necessarily from customers intending to cancel their policies,” comments David Brewer, co-founder of Protect Line.

“When we reach out to our customers with bounced direct debits, we’re shocked to find at least one-third are mistakes, as people seem to have less money in their bank accounts than expected. Most of the time, the customer can solve the problem quickly, but there is a definite trend of consumers running into financial issues.”

Whether the downward trend in Direct Debit will continue is anyone’s guess. Still, as the global financial crisis rages on unabated and inflation continues to rise, consumers and businesses will bear the brunt of the ongoing financial pain.