A direct debit mandate is an authorization given by a customer to a lender, allowing them to withdraw funds directly from the customer’s bank account. Once set up and approved by the customer’s bank, the mandate remains active until it is either cancelled by the customer or revoked due to changes like account closure or mandate expiration. Because of this, a single mandate can be used multiple times for recurring or future payments, as long as it remains valid and active.
This flexibility makes mandates especially useful for lenders that rely on scheduled loan repayments. It eliminates the need for customers to reauthorize each transaction, streamlining the payment process, improving efficiency, and reducing payment delays or defaults.
For example, a digital lender offering 12-month consumer loans can collect repayments automatically each month using a single direct debit mandate obtained during loan application. The borrower doesn’t need to take any further action after setting it up, and the lender benefits from consistent, automated collections without the overhead of manual tracking or follow-ups.
Learn more about mandates here
Also read: You can now activate your direct debit mandates in 1 minute