When direct debit becomes a hook, you can’t do without it
I remember when companies offered discounts to encourage people to choose regular payment plans. Desperate to have more customers on automated billing, the companies were happy to share some of the benefits. Now, some companies are almost insisting that customers are on direct debit plans from the start, especially those that offer recurring services or annual subscriptions.
Automated invoicing will surely become a bigger issue in the digital economy as more goods and services are purchased online and customers are encouraged to switch to electronic invoicing rather than paper invoicing. Direct debits are part of this trend.
Rising utility bills is another issue. The difference between paying a utility bill on time or late can be over $ 100 in some cases (how wrong it is), so more people are being pushed into automated payment plans to ensure prompt billing. and early payment discounts.
The problem is when automated payment systems make it harder for customers to move from energy providers to those with better deals. Or when customers have a harder time resisting price increases from suppliers, or budgeting for them because they are on an automatic payment cycle.
Still, I’m not suggesting people ditch automated payment plans with respected vendors. They reduce paperwork and the risk of late fees. They can create loyalty points and other perks for organized consumers who pay credit cards every month.
But it’s worth asking: Do the benefits of automated payment plans always outweigh the costs and risks? Is the small amount of administration saved and the lower risk of late fees worth giving vendors access to your sometimes hard-to-cancel credit card or bank account?
Could you end up paying for products you don’t use, ignore account charges, and be held hostage to price hikes? Could your budgeting suffer from a loss of control over payments?
Additionally, are you more exposed to cybersecurity, personal identity theft, or other frauds by allowing providers here and abroad to debit your account?
Plus, what’s the financial benefit to you if you sign up for an automated payment plan? Businesses get more customers, so are they sharing some of the earnings or are you just helping them make more money?
I cannot answer these questions because every consumer is different. I know that in such an intensely competitive market, the incentive to act unethically with automated payment plans is increasing. The digital economy relies on user communities locked into recurring services and payments.
It doesn’t matter that someone hasn’t used a product or service for almost a year and is no longer a customer. They checked a box indicating that the company can bill them periodically. In a faceless online world, that’s all that matters to some digital larvae.
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