It was all because of ice cream!

Issue 462 | 18 March 2023

It was all because of ice cream!

Since its launch over half a century ago, Bacs Direct Debit has certainly become an embedded, hassle free, frictionless and pre-eminent way of making recurring payments. 

However, the UK’s pre-eminent recurring payment solution is facing its greatest challenge. Will Direct Debits compete, coexist, complement or converge with Request to Pay and Variable Recurring Payments? 

As the new recurring payment kids on the block continue to grab the limelight let’s take a quick look at how Bacs Direct Debit (and Direct Credit) works and how it all began.

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How it works….

Here's a simple and concise explanation of Bacs Direct Credit and Direct Debit from top pilot Captain Roger Over and his employer International Airlines¹.

In this video you’ll hear the original reason for the (in)famous Three Day Clearing Cycle and, perhaps, the explanation will lead you to question the continuing need for such a cycle!

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And how it all began…..

Alastair Hanton was the inventor of Direct Debit, a founder of National Girobank, and a tireless campaigner for causes ranging from sustainable transport to Christian Aid.

It was in 1964, as an executive of Unilever, that Hanton came up with a solution to the problem of collecting variable payments from thousands of ice-cream sellers – by obtaining authorisation to retrieve the money direct from their bank accounts rather than waiting for cheques or relying on standing orders.

In this video recorded in 2014 Alastair Hanton says that he had had ‘many meetings with stuffy bankers’ over his idea for taking variable payments from bank accounts, but he wore them down.