Direct Debit vs Automatic Payments

10th August 2020 by Infocare Solutions

The Short Guide for Childcare Centres

Cash payments are quickly becoming a thing of the past, being swiftly replaced with contactless and electronic payments. This movement has seen the rise of Direct Debit as a safe and convenient method for childcare centres to collect recurring parent payments.

With the ability to greatly reduce manual administration work and improve overall payment collection rates, Direct Debit is becoming the go-to for childcare centres in New Zealand and could be your ticket to improved financial performance.


So, what is Direct Debit? How does it work? And how is it different to Automatic Payments?

Direct Debit is an agreement where the parent gives the centre permission to deduct an agreed or variable amount from their card/bank account at a set interval. This agreed amount is the amount on the child’s account, however, if there are changes to a child’s attendance, whether it is increasing or decreasing, the amount deducted can be amended by the centre without the parent having to sign the agreement again. Once the Direct Debit payment is in place, the amount owing is deducted automatically from the parents’ account and settled to the centre at the agreed intervals.


In comparison, Automatic Payments are set up by parents to instruct their bank to make a payment to a nominated party at a regular frequency. This type of payment relies on the parent to pay the correct amount to the correct bank account and, if there are any changes to their child’s attendance, update the payment amount manually. With many variables, the probability of receiving the correct payment amount at the set time decreases, with parents forgetting to pay or update their payment amount. This can lead to increased debtors and difficulty retrieving these funds.

Why shift to Direct Debit payments?

-Centre’s can take control of payment collection without having to rely on parents to remember to pay.

-Payments can be customised to meet the needs of families, such as adjusting the payment amount and frequency. Any changes to the payment plan are automatically updated and don’t require manual intervention.

-Direct Debit payments are not limited to bank transactions. You can offer the ability for parents to use different payment options such as debit and credit card. When a payment fails or is missed, it will automatically retry at a later date or can be manually retired when the issue has been resolved.

-Centre’s can access reports detailing all upcoming and past payments, failed payments and the failure reasons easily through Infocare Solutions.

-Cash flow can be optimised by ensuring consistent payments from parents. This allows your centre to better plan for the future and predict revenue.



Why you should steer away from Automatic Payments?

-Automatic Payments are a ‘push payment’, and still rely on parents to create and manage the payment instructions.

-Automatic Payments need to be manually updated when there are any changes to the payment.

-The centre has no ability to view upcoming payments or track failed payments and the reason behind them. They can only assume that the parent has not paid.

-If a payment fails it is up to the parent to rectify the issue. The centre will not be notified and will have to manually keep track of and chase up payments.


Infocare Solutions’ integrated billing features, powered by Ezypay, allows childcare centres to start enjoying the many benefits that Direct Debit has to offer. With the ability to greatly reduce manual administration, improve collection rates, and offer better payments insights, Direct Debit is the new go-to for payment collection and management. Explore more and find out how your centre can benefit here.

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