Penta releases Direct Debit v.1
>>> Announcing Direct Debits for Penta Premium customers
The other day, a phone vibrated on the table across from me. Those close enough to hear the buzz froze for a few seconds, holding their breath in expectation. When someone nodded as if to signify «It happened», a few of us in the Product team loudly erupted in joy as though something as improbable as Friends returning for one last season had miraculously occurred.
We had just successfully collected our very first payment via Direct Debit to a Penta account.
A must-have in Germany
In the eurozone, businesses may collect money for their services directly from their clients’ accounts thanks to a payment scheme called Direct Debit. This option is very popular in Germany and affords thousands of businesses a much higher chance of getting paid on time than having to deal with late invoice payments.
This method is in fact so widespread in Germany that Direct Debits amount to 47% of all non-cash payments, way ahead of bank transfers (28%) and card payments (23%). Needless to say, with Direct Debits as indissociable from German banking as curry from wurst, anyone serious about business banking in Germany — such as yours truly — can’t go a long way without them.
So, we built it. I’m very excited to announce that this much-demanded product is, at long last, ready to hit the road, enabling one-off and recurring Direct Debits to your Penta account. Offered to Penta Premium account holders, it allows you to collect payments each month up to a combined amount of 10,000 EUR.
We are now testing this pilot product with a limited amount of Penta enthusiasts before gradually rolling it out to a broader audience and packing it with additional functionalities that’ll help your business carve out more time for your customers.
How can I get it?
To get you started with Direct Debits, sign up with Penta and join our waiting list to receive access to our Direct Debit service. Once you are set up, we’ll ask you to transfer a small security deposit, kept safely at our banking partner solarisBank for as long as you use our Direct Debit service. You’ll be able to keep an eye on this deposit at all times.
This may seem like an uncommon requirement from your bank. The reason we do this is because the Direct Debit scheme affords your customers the option to claim back their money up to 8 weeks after it is taken from their account. When this happens, your bank may need to cover for you if your account balance is insufficient when the reimbursement takes place.
This short-term credit creates a risk which long-established banks handle diversely. Some might restrict Direct Debits to customers with a good credit profile. Others might use an overdraft facility or hold on to a part of each collection for several weeks.
About this deposit
At Penta, we simply don’t think your credit score alone should determine your ability to collect payments, particularly when a large chunk of our customers are young businesses with little transaction history. We also think liquidity is too important to your business for us to sit on your money for weeks, especially if your clients are good payers.
So, while we work to improve our Direct Debit service, our pilot will involve a one-time security deposit of 1,000 EUR. In the event where your customer disputes a payment and your account is not sufficiently funded to return it, we’ll use some of your deposit money to cover that loss. Fair?