Why you should be careful about using GoCardless

GoCardless may be a big player but are they the right one

GoCardless has been making waves at the moment from partnerships with Tide and Xero. To their social Media content such as on Linkedin and Twitter.

Taking payments for your services couldn’t be easier right?

GoCardless offers a Direct Debit facility to businesses unable to offer it themselves, with 1% £0.20 fee or 2% + £0.20 for international payments it seems a no-brainer.

What’s the catch?

well, the way in which the GoCardless allows signups is the problem. GoCardless allows you to sign up and verification takes place by an automated system, their service then allows and actively promotes you to start taking payments.

All sounds great? Yes, it definitely does but unfortunately, this is where the situation can get dangerous. GoCardless can choose to close your account at any time, you get an email such as:

My experience with GoCardless

When I first started out in business my main request was computer repair, I would fix a computer and then depending on the discussion offer a maintenance plan.

GoCardless then made sense to me, I signed up and went through verification. I was actually asked by GoCardless for some extra verification steps for the business.

So back at the beginning of 2018, we started collecting Direct Debit subscriptions. Over time our payments would continue to grow as the business did, then one day during lockdown we received the email below.

Initially, I thought it was in relation to an account we started to sign up for but never continued. However, I tried to send a link to someone to sign up and was getting an error message.

My first reaction was to reach out to the GoCardless support team, they gave advice but never gave any clue about the closure. The only possible reason I had is their email says:

“We are required to perform a number of checks and verifications in order to confirm your identity and be satisfied with your use of GoCardless as a payments processor.” As many of the reviews are all during lockdown I came to the possible assumption they had less staff. It may be possible they are unable to complete verification due to staffing levels and choose to reject rather than allow.

As per their terms if you use GoCardless they are taking responsibility for taking payments, for GoCardless the risk is greater than the reward even if there is no issue with the business.

During the lockdown, I have known a photographer, a videographer and an IT consultant go through the same verification trap with GoCardless.

They close accounts for no reason, if you email back they quote FSA regulations.

However, when dealing with other companies if there are issues generally gives you an idea.

Should GoCardless close your account then any pending payments will be hard to retrieve.

Just imagine for a moment that you took thousands in payments, and then your payment processor closed your account?

The Direct Debit Guarantee does state that you are entitled to a full and immediate refund. However, GoCardless advises that they do not control the refund timescale.

We read reviews on TrustPilot that were quite scary, to be honest. GoCardless does have a 4* rating on TrustPilot so I am not saying they are bad, unfortunately, their recent actions make it difficult to support them.

Alternatives available

There are alternatives available that offer Direct Debit. Other services available are companies such as:

Stripe

SmartDebit

Eazipay

London & Zurich

FastPay

From the pricing queries, I went through the prices weren’t as low as GoCardless. However, many of the other services register SUN (Bacs Service User Number) on your behalf.

There will also likely be a signup and monthly fee for some of the others as well. GoCardless offer their 1% + £0.20p for transactions up to £5000,

but it will be branded as GoCardless Ltd when the payment is taken from the user’s bank account. As GoCardless is using their own SUN, they are taking the risk so if you take a large payment there is a greater risk of account closure.

You have to weigh up the pros and cons, I will keep this post updated when I get more information about new products or recommendations.

Need help or want to know more?

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