How does direct debit work? Easily explained

If you want to pay for a purchase online, you can choose the direct debit. We explain to you in this practical tip how exactly the payment method works.

Direct debit: how does it work?

• The money owed is debited from your account without your intervention via a direct debit. Both companies and authorities can carry out direct debits. So you don't have to transfer the money yourself.
• So that a company or an institution, for example the tax office, can automatically collect its claim, you have to agree to the direct debit beforehand. To do this, you have to sign a direct debit mandate.
• If you buy something online by direct debit, no signature is required. The one-off amount will be debited from your account by the seller. For example, if you sign the direct debit mandate from the tax office, the tax office will now automatically debit the required tax amounts from your account.
• There is no limit to the amount that can be collected by direct debit. This is a major disadvantage of the procedure: if the tax was incorrectly calculated by the tax office, the withdrawn money is gone for the time being. Without the direct debit mandate, you could have dealt with the error before the direct debit.

In the next practical tip we will show you how to post a direct debit back.