If the same client pays you every month, direct debit. If it's a one-off invoice, a new client, or money you want in your account today, open banking. Everything else follows from one difference: open banking is a push your customer authorises for each invoice, while a direct debit is a standing authority you collect against until they cancel it.
Put plainly, that decides who has to act. With open banking, your client does, every time. With direct debit, you do, once a mandate exists, and your client does nothing at all.
The short version
- Open banking payments are single instructions your customer approves in their banking app, so nothing carries over to the next invoice.
- A direct debit is "an instruction from a customer to their payment service provider authorising an organisation to collect varying amounts from their account, as long as the customer has been given advance notice".
- Across Adfin, invoices set to collect automatically are paid 98.0% of the time, against 90.8% for invoices collected on demand.
- Open banking money arrives almost immediately; a direct debit runs through the Bacs cycle of "less than three days".
- A failed or cancelled direct debit reports back to you. An unpaid open banking invoice tells you nothing.
- Nobody has published an independent comparison of what the two cost against card acquiring, so compare your own quoted rates.
What each one is
Open banking, or pay by bank, is a bank transfer your customer initiates. Your provider builds the instruction with your account details, the amount and the invoice reference already in it, and hands your customer to their own bank to approve it. The money then travels over Faster Payments, and Pay.UK says funds are "usually available almost immediately, although they can sometimes take up to two hours". Once sent, a Faster Payment can't be cancelled, so there's no chargeback in either direction.
A direct debit works the other way round. Your client signs a mandate once, giving you authority to collect. After that you tell them the amount and the date in advance, described in the Direct Debit Guarantee as "normally 10 working days" ahead or as otherwise agreed, and the collection runs through Bacs, which describes its own cycle as "less than three days from start to finish".
So one of them is a payment and the other is a permission. Everything below falls out of that.
Who has to act, and what happens when they don't
Every open banking payment needs a person to open your email, click through, choose a bank and approve. Most of the time they will. Across Adfin, 62.0% of bank payments are made on or before the due date, and card payments run at 65.1% (Adfin platform data). Those are respectable figures for a customer-initiated method, and they still mean that roughly a third of those invoices go past their due date and become something you've got to chase.
Set that against how invoices behave when nobody has to be persuaded. Adfin's own figures across more than 150,000 payment requests created in the seven months to the end of January 2026 show invoices set to collect automatically paid 98.0% of the time, with 0.9% going overdue, where invoices collected on demand are paid 90.8% of the time with 5.3% overdue (Adfin platform data).
That pair needs reading carefully, because automation isn't doing all the work in it. An invoice set to collect automatically almost always means a direct debit mandate is already in place, so what you're looking at is partly the mandate and partly the kind of client relationship that gets a mandate signed in the first place. The gap is real; the cause is a mixture.
The practical version for you: with open banking, a client who's busy or disorganised or quietly short of cash simply doesn't pay, and you find out by looking. With direct debit, the same client pays unless they take a deliberate step to stop it.
What you find out either way
This part gets missed, and for a business running credit control it can matter more than the payment itself.
A direct debit reports back. If a collection is returned or a mandate is cancelled or amended, an advice comes back through the Bacs messaging your provider handles, and you know within days. Providers publish the reason code lists, ADDACS for mandate changes and ARUDD for returned collections, although the Bacs rulebook that defines them is behind a login for registered service users, so the public versions are a provider's reproduction of a document you can't read. Either way, the information reaches you without you asking.
An unpaid open banking invoice generates nothing. There's no failure, because there was no attempt. The invoice just sits there, and the only thing that tells you anything is your own ledger. A client who has decided to stretch you gets to do it silently.
That difference is why practices with a book of recurring fees tend to end up on mandates. Not because the collection rate is better, though it is, but because a cancelled mandate is a piece of news and an unopened email is not.
Speed, money and cost
Open banking is faster in every sense. Your customer approves and the money moves; on Adfin an open banking payment settles to you the same day, against T+3 for direct debit. If cash timing is tight this month, a payment link with pay by bank on it is the tool that puts money in your account today.
Direct debit is slower and more certain. You know weeks ahead what's being collected and when, which makes a fee book forecastable in a way a set of payment links never is.
On cost, be careful what you read. Adfin charges 1% + 20p per successful payment, capped at £4, for both direct debit and bank payments, so between those two your choice isn't a pricing decision. Against cards, no regulator, Pay.UK or Open Banking Limited figure comparing open banking with card acquiring has been published, and the savings percentages you'll see quoted all trace back to providers describing their own product. Compare the rates you've been quoted, on your own invoice sizes, and include the cap.
How to choose, in practice
| Your situation | The usual answer |
|---|---|
| A monthly retainer or recurring fee | Direct debit |
| A one-off invoice for a new client | Open banking |
| A deposit before you start work | Open banking |
| Money you need in the account today | Open banking |
| A fee that varies each month | Direct debit, with advance notice of the amount |
| A client who has already missed payments | Direct debit if they'll sign, so the next collection doesn't depend on them remembering |
Most businesses want both, and they're not really in competition. Put the predictable money on mandates so it collects itself, and use pay by bank for everything ad hoc, urgent or one-off. Adfin gives you both from the same invoice, so a client can be on a mandate for their retainer and still get a pay by bank link for a project fee, without you rekeying anything.
Common questions
Is open banking or direct debit better for collecting invoices? Direct debit suits recurring fees, because your client authorises once and every later collection happens without them acting. Open banking suits one-off invoices, new clients and money you want today, because your client approves each payment individually.
Which one gets paid more reliably? Across Adfin, invoices set to collect automatically are paid 98.0% of the time with 0.9% overdue, against 90.8% paid and 5.3% overdue for invoices collected on demand. Automatic collection usually means a direct debit mandate is already in place, so the mandate and the client relationship behind it both contribute to that gap.
Which one is faster? Open banking. Pay.UK says Faster Payments funds are "usually available almost immediately, although they can sometimes take up to two hours", while Bacs describes its direct debit cycle as "less than three days from start to finish". On Adfin, open banking settles same day and direct debit at T+3.
Is open banking cheaper than direct debit? On Adfin both are 1% + 20p per successful payment, capped at £4, so between those two the decision is about how the money gets collected and not about price. No independent comparison of open banking against card acquiring has been published.
Can I take a refund or chargeback back off a customer? An open banking payment can't be reversed, because "once sent Faster Payments cannot be cancelled", so any refund comes from you directly. A direct debit carries the Direct Debit Guarantee, under which a payer is entitled to "a full and immediate refund" from their bank where an error is made.
Do I have to choose one for the whole client base? No. Most businesses run both, with recurring fees on mandates and ad hoc invoices on pay by bank links, and the same client can be on both at once.
Sources
- Bacs — Direct Debit (accurate as of August 2026)
- Pay.UK — the Direct Debit Guarantee (accurate as of August 2026)
This article compares open banking and direct debit for business invoice collection and is not legal or financial advice. The Bacs rulebook is not published openly, so where only providers describe a rule this article says so. Last updated August 2026.
