Do banks (directly) earn money from direct debits?

Banks are keen to encourage us to use them for direct debits. Some require your to have direct debits with them to earn perks (like cashback). Monzo doesn’t do this but does have features to try to encourage you to use it for direct debits (such as bill pots).

Do banks directly earn any money from direct debits (something similar to interchange for card payments)?

Or is the desire to incentivise direct debit use entirely because it makes it more likely you will use that bank as your main bank and therefore easier to sell various financial products to you?

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I suspect the answer is (b)

Make it easier for people to manage their finances = more deposits made into their accounts in order to more easily manage their finances.

It worked for me.

And I subscribed to Monzo Premium

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Given the Bacs 3 day cycle I think they do make money for one day.

But that would be peanuts.

It is more to do with increasing overall average deposits and using the account more. Aka stickiness.

I was thinking more whether bank charges the company pulling money from the account any transaction fees?


The customer bank simply sees it as a Bacs transfer out more or less.

The company that collects direct debits, depending on the setup pays fees to do direct debits. But normally it is a flat fee per batch submission, thus relatively cheap and competitively priced.

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As others said, it’s 100% this.

In fact banks have to pay a nominal amount to process a direct debit.


It’s a classic example of ecosystem benefits. Banks certainly do make big money off direct debits. Ironically just not directly

Not unlike lots of other industries, shops are a classic example. 9p baked beans or cigarettes in a local corner shop. Almost no money or more likely a loss is made but it gets you into the store and hopefully you’ll buy something else.

Don’t they? I thought that if you don’t pay X amount in each month and have at least one active direct debit, then you have to pay for replacement cards and a fee on cash withdrawals over a limit.

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Well I think “perks” is implied to be cashback like it is with Barclays Blue Rewards and NatWest rewards - i.e. £3 cashback.

The removal / reduction of fees is mostly a stick/deterant to prevent Monzo account abuse / excessive use. Rather than a perk or reward.

I appreciate the distinction, but, if the opening statement is:

Then it doesn’t seem to be a distinction that matters.

Point of the statement was incentives might not only be financial. Monzo, for example, appear to feel it’s worthwhile investing effort into making the bill paying (generally direct debit) experience appealing compared to typical banks.

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It’s more for you to stay put. If you don’t have direct debits you’re unlikely to pay salary or keep money in it and since we’re lucky to have free banking in this country they need to find ways to sell you profitable lending when you’re more committed.