With e-commerce and online transactions, cart abandonment or payment drop-off rates can be up to 70%. This makes it crucial for businesses to address and reduce friction to improve their customer checkout experience and increase revenue.
Xendit’s Direct Debit product is the game changer for our merchants. With our direct debit, merchants can provide seamless payment flows for their customers and true auto-debit (payments without OTP) for recurring payments, reducing drop-off rates from customers.
Direct debit is now available for Xendit customers in Indonesia and the Philippines. Xendit is working with the largest banks in both markets to provide this service, with BRI in Indonesia and BPI in the Philippines as the first to launch
How does Direct Debit work?
Xendit’s direct debit is a payment method where end users can register their debit cards or online bank login with a merchant through Xendit. After a one time authorization, merchants can pull funds directly from an end user’s bank account without OTP. This tokenized payment flow enables one click check-out for high ticket items, and recurring payments well suited for subscriptions models or payment plan models. On top of that, merchants can enjoy instant settlement and fees significantly lower than traditional credit card fees.
Direct Debit can help solve the following key reasons why users drop-off.
- Unnecessary check-out steps – the more steps there are in a payment flow, the more opportunities for end customers to hesitate in completing the transaction. Direct debit runs on tokenized payments, enabling merchants to enjoy one click payment flow. This significantly reduces payment friction.
- Insufficient balance or credit – end customers do not always keep track of balance in their accounts, there is a higher probability of payment failing if the end customer uses eWallets or Credit Cards. Direct debit is linked to the end customer’s bank account, resulting in a higher likelihood of a successful payment
- Per transaction authentication issues – payment drop offs happen when end customers are not able to receive SMS, forgotten PIN or mobile app issues. With a tokenized payment flow in direct debit, end customers just have to authenticate once and avoid any authentication issues for subsequent transactions.
- Compulsory OTP requirement – OTP on every transaction blocks merchants from supporting subscription models or payment plans. Xendit helps to solve this by offering direct debit without OTP and a recurring payment APIs for our merchants.
Ecommerce business – Increase payments acceptance rates for high value items with direct debit and receive payments with fast settlement times
Subscription services – Auto debit (recurring) from your user’s bank account without the need for authentication each time. Some examples include collection of membership fees, SaaS services, Over-the-top (OTT) media services
Mobile Wallet top ups – Move funds from the user’s bank account to your e-wallet easily and quickly without performing multiple tedious steps
Financial services – Secure payment infrastructure that enables financial companies to receive high-value payments on a recurring basis – insurance (annual/ monthly), investment plans
Getting started is really easy. New customers would just need to sign up with Xendit dashboard, and they can start testing our APIs immediately. Integration with Xendit’s Direct Debit can be performed with direct API integration or generating invoices on our hosted payment page, xeninvoice.
Activation of direct debit with the bank takes about 2 work weeks. With a one time integration, merchants will be able to enjoy direct debit bank channels across the region and subsequent newer direct debit payment channels added to Xendit in the coming months.