Typically, the customer is given a Direct Debit form (above image) by the business to instruct their bank to set up the payments.
A downside of Direct Direct is the time it takes for the first transaction to clear: usually 1-2 weeks. But this isn’t a huge deal for long-term services like gas, electricity and water bills, Council Tax, phone bills, and mortgage or rental payments.
In contrast, standing orders are akin to normal bank transfers that are just scheduled in advance by the payer. The receiver of funds cannot amend the standing order, so usually agrees with the payer when they would like to receive payments. The payer’s bank has no obligation to reverse standing order transactions, so the payer should not forget to cancel it when the bank transfers are no longer needed.
You can also use standing orders purely for managing your own finances if you have multiple accounts. Someone might, for example, want to auto-transfer specific amounts to specialised accounts for savings, food and leisure budgets every month following pay day.
Bacs Direct Credit is mainly for bulk-paying multiple accounts reliably on time. Businesses and organisations use it for payrolls, ongoing supply orders and regular government payments to e.g. benefit claimants. The money is immediately accessible on the scheduled dates and does not need time to clear, since it uses a crediting instead of debiting system.
Continuous payment authority (CPA) is often used for consumer services. You know CPA is the system if a subscription registration requires your long debit, prepaid or credit card number instead of a current account number. For example, Square Virtual Terminal shows an option for recurring payments, and it uses the long card number to process transactions – so this is CPA.
Often, CPA is more accessible to consumers since it doesn’t require having a bank account. Most people have some sort of a card. However, businesses must cancel a CPA if the customer withdraws their consent to charge their card on a recurring basis. A small business has to take the rules seriously around keeping customer data secure, which means deleting all card information on request and only using a CPA for customer-authorised payments.