How a direct debit works

Direct debits are automated payments allowing your business to withdraw funds directly from a bank account on an agreed schedule, which ensures timely and simplified payments. It is commonly used for recurring expenses such as utilities, subscriptions, and loan repayments, providing customers and merchants with a reliable and efficient payment solution.

NAB Direct Debit eliminates the worry of when and how you’ll get paid. Funds are automatically drawn from your customer’s account at the same time every month so you both know what to expect, from one billing cycle to the next.

How to get started

1. We’ll establish you as a Direct Entry User (subject to approval and credit).

2. You’ll receive approval from your customers to draw funds from their account by having them complete a Direct Debit Request (DDR) form.

3. Using NAB Connect, you create and submit an electronic direct debit file containing your customers’ account numbers and the amounts to be debited. Instructions on creating a payment file can be found under NAB Connect help.

4. We’ll process the file, credit your nominated business account and debit your customers’ bank accounts overnight.

Credit card refund times typically vary depending on the merchant and the card issuer’s policies. Factors such as weekends, holidays, and international transactions may also affect the speed at which the refund appears on your statement.

How does direct debit work?

Direct debit is a payment method where your customer authorises your business to automatically withdraw funds from their bank account on an agreed upon basis – whether that’s weekly, monthly or on specific due dates.

First, your customer completes a direct debit request (DDR) form to authorise the payment and on the agreed date, your payment provider initiates the debit from the customer’s nominated account. The funds are then deposited into your business bank account once cleared.

Direct debit is ideal for collecting regular or recurring payments, such as memberships, subscriptions or billings, which helps improve your cash flow consistency while reducing manual invoicing.

How long does direct debit take?

Direct debit transactions typically take 1 to 3 business days to process in Australia. However, the timing may depend on various factors such as the payment cut-off time, which banking institutions are involved in the process and whether the debit is processed on a business day or over the weekend.

While some transactions may settle within 24 hours, it’s best to allow up to three business days for funds to clear and appear in your business account. For businesses using NAB’s direct debit solutions, transactions can be monitored together with settlement timeframes via their merchant reporting tools.