No. Xero raises the invoice, shows your customer a pay now option and records the payment, but the money itself is collected by a payment provider you connect, such as Adfin, GoCardless or Stripe. The provider holds your customer's mandate, takes the payment, sets the fees and decides when you're paid, so choosing direct debit in Xero really means choosing a provider.
In this article
The short version
- No: Xero records invoices and payments, and a connected provider collects the money
- The provider holds the mandate, sets the fees and decides when you're paid
- Xero charges nothing for online payments; the provider charges per transaction
- Failed-payment fees, payout timing and chasing differ by provider
- Adfin is an approved Xero payment partner covering direct debit, cards and chasing
Who does what when you collect through Xero
Xero is accounting software. It doesn't move money out of your customers' bank accounts, and its bank feeds bring transactions in without sending anything out. For direct debit, Xero works with payment providers: its own UK pages name GoCardless and Stripe, and other providers connect through the Xero App Store.
Once a provider is connected, the work splits like this.
| Job | Who does it |
|---|---|
| Raising the invoice | Xero |
| Showing a pay now option on the invoice | Xero, once a provider is connected |
| Asking your customer to sign the mandate | The provider |
| Holding the mandate and taking the payment | The provider |
| Notifying your customer before each collection | The provider |
| Paying the money out to you, and when | The provider |
| Recording the payment against the invoice | The provider's integration, into Xero |
| Handling a failed collection | The provider, if it does |
Your contract for collecting is with the provider, not Xero. So are your merchant terms, the name your customers see on their bank statement and what happens when you want to move your mandates somewhere else.
From your customer's side, it still feels like paying a Xero invoice. They see a pay now option on the invoice email or PDF, sign the mandate once on the provider's form, and from then on each invoice is collected on its due date after advance notice. If they haven't signed, the invoice sits unpaid until someone follows it up, because Xero has nothing to collect against.
What it costs
Xero doesn't charge anything to switch on online payments. You pay the provider's transaction fee.
For direct debit, Adfin and GoCardless both publish a headline price of 1% + 20p, with the 1% capped at £4, so most collections cost no more than £4.20 (both add 0.3% on amounts above £2,000). What differs is what you pay around it. GoCardless charges its fee on every payment you submit, including ones that fail, takes its fees out before paying you, and charges £50 a month to show your business name on customers' statements. Adfin charges nothing for a failed payment, pays you in full with its fee invoiced separately, and charges £36 a month for the business-name option.
Take a £600 monthly retainer. 1% of £600 is £6, which the cap brings down to £4, so the fee is £4.20. If one month's collection fails and goes through on a retry, a provider that only charges for successful payments charges £4.20 once. One that charges on every submission charges twice.
Why the provider matters more than Xero
Because Xero only records what the provider does, most of the questions that affect your cash are questions for the provider:
- How long after the due date does the money reach your account, and does it arrive in full?
- What happens when a direct debit fails? Is it retried, and does it cost you?
- Who chases the customer who never signed the mandate, or whose payment bounced?
- Can the same customer pay a one-off invoice by card or bank transfer without a second provider?
- If you leave, do your customers have to sign new mandates?
GoCardless collects by direct debit and bank payment but doesn't take cards or chase unpaid invoices, and Stripe pays out daily lump sums with its fees deducted and leaves the chasing to Xero's email reminders. So you can end up running two or three tools around Xero to cover collection, cards and chasing.
Adfin is an approved Xero payment partner and covers those jobs in one place. It takes direct debit, cards, Apple Pay, Google Pay, pay by bank and bank transfer, pays out every weekday, and posts each payment back against the invoice in Xero. Its Customer Agents chase unsigned mandates and overdue invoices by email, SMS or WhatsApp on a schedule you set, retry failed direct debits for free, and then ask the customer to pay another way. And if you're moving 10 or more mandates from another provider, they come across through the Bacs bulk change process without your customers re-signing.
Common questions
Does Xero have its own direct debit service? No. Direct debit in Xero always runs through a connected provider, which holds the mandate and collects the money.
Which providers can collect direct debit through Xero? Xero's own payment settings connect GoCardless and Stripe, and other providers, including Adfin, connect through the Xero App Store.
Who holds the mandate if I collect through Xero? The provider you connect. Your customer signs the mandate on the provider's form, and the mandate stays with that provider.
Does Xero charge a fee for direct debit? No. Xero charges nothing for online payments; the provider charges per transaction.
Will the payment show in Xero automatically? Yes, if your provider integrates with Xero. The payment is recorded against the invoice, usually through a clearing account that your payouts are then transferred from.
Can I change provider without my customers signing again? Yes, with 10 or more mandates, which move to Adfin through the Bacs bulk change process. With fewer than 10, customers sign a new Adfin mandate.
Sources
- Xero - Invoice payments: give your customers more ways to pay (accurate as of October 2026) https://www.xero.com/uk/campaign/invoice-payments/
- Xero - Online payment services for UK small businesses (accurate as of October 2026) https://www.xero.com/uk/guides/online-payment-services-get-you-paid-faster/
- Xero App Store - Adfin (accurate as of October 2026) https://apps.xero.com/uk/app/adfin
- Adfin - Pricing (accurate as of October 2026) https://www.adfin.com/pricing
- GoCardless - Pricing (accurate as of October 2026) https://gocardless.com/pricing/
