# How Direct Debit works

Direct debit is a payment method that allows an account holder to grant authorization for a biller or lender to take money from their bank account for services as of when due. Direct debit is similar to debit cards in its ability to debit a customer’s account with prior authorization.

Direct debit helps businesses that require recurring payments on specific dates with fixed amounts, such as insurance premiums, loan repayments, service subscriptions, or variable recurring payments on different dates (e.g., postpaid lines, and electricity usage).

This direct debit API facilitates the process for Service Providers (referred to as Billers) to generate debit mandate instructions on their client's/customers' bank accounts for services rendered or products sold.

These debit mandate instructions are created as digital versions of physical instructions duly signed by the account owners (clients/customers). Once generated, the mandate instructions are automatically sent to the bank where the account is held for review and approval. The approval process requires the bank to contact the account owner to authorize the mandate, which typically takes 24 to 48 hours.<br>

The system automatically assigns a unique mandate code to each initiated mandate. This mandate code is used to initiate a direct debit transaction on the bank account associated with the debit mandate instruction.


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