GoCardless Review NZ: The best direct debit merchant?

I’m just going to come out and say it. In my opinion, GoCardless is the best direct debit merchant available to NZ businesses.

I have no affiliation with them, I just use it in my practice and have had a great experience, so I’m writing about it so others can benefit from their service.

It’s extremely easy to use. A few clicks and a few details here and there and you’re away.

It has a seamless interface that makes the user experience easy and foolproof.

The fees are ridiculously low.

It’s a global powerhouse that doesn’t want to charge what the NZ banks are charging. That’s a first.

What are the fees? 1% + $0.40 per transaction, capped at $4

Which is super low in comparison to the banks and competitors like Stripe.

Stripes fees are 2.7% + $0.30.

GoCardless reckons they can charge a lower fee because it’s a direct debit, rather than a charge on a credit card like Stripe.

On a $1,000 charge, with GoCardless you’ll pay the max of $4, whereas with Stripe you’d pay $27.30. A massive saving.

On $2,000, you’d pay Stripe $54.30.

If you’re turnover is $200,000, you’ll be paying Stripe a whopping $5,400 a year, vs GoCardless $1,000, assuming 200 transactions at $1,000 each.

I must say after having used Stripe initially, their user interface is a bit over the top. In fairness, Stripe probably wasn’t designed as a direct debit merchant and is more catered to eCommerce and retail transactions, whereas GoCardless is focused solely on direct debits.

GoCardless allows you to step up to a higher fee of 1.25% + $0.40 per transaction if you want to better manage payment failures. I think this would be useful for businesses dealing with a high transaction volume.

The higher tier will automatically retry the payment at a point where the clients bank balance is likely to be the highest based off their user data.

I’ve retried a couple of payments while using the lower fee tier and it’s been easy to use and seamless.

GoCardless pros and cons.

GoCardless vs the NZ retail banks…GoCardless is your best bet….

The big banks in New Zealand are still stuck in the technological dark ages.

You likely bank with one of them and have probably experienced the pretty average service from their mobile apps and online banking portals.

The banks in NZ make their money from the home lending and mortgage business, rather than business or personal banking.

Business lending is a risk for them, so they haven’t ploughed a whole heap of dollars into the development of that arm of their businesses. It’s ancillary.

ASB, ANZ, and Westpac

ASB is both my personal and business bank. Nothing special, but they do offer direct debit services for business.

The client needs to fill in a physical authority form which is then sent to the bank for them to process.

They charge a $0.20 per transaction fee, which is very low.

However, for me, the clunkiness of a physical form is too painful.

For ANZ and Westpac, it’s largely the same process as ASB. With Westpac, it looks like you need to have banked with them for more than 12 months and be operating through a company. That rules out sole traders or anyone with an urgency to setup a direct debit collection system.

The GoCardless user experience

The user experience is simple and clear.

That also speaks for the mobile browser experience (they don’t have an app) which I sometimes use to check on a subscription template or see when a payout is coming my way.

GoCardless does utilize two-factor authentication which can be a bit annoying the first few times you set it up, but after that it’s easy and in the long run it’s going to prevent fraud, so can’t complain too much!

As mentioned, they have focused on direct debits and have designed their system around it and have nailed it.

There’s nothing additional that you don’t need.

That leads to my one critique of the platform. The simplicity has resulted in a lack of reporting.

For instance, in the past I have wanted to run a report that shows when all of my clients future direct debits are collected. No such report exists, you need to go into each subscription template to see this.

How payment collection works

You can either set up a one-off payment, or a subscription template.

Also note, if you’re using Xero, you can add GoCardless functionality and accept GoCardless on your invoices which is a really easy option for the client and you receive payment instantly.

The subscription template is straightforward. I’ve taken a screenshot of the form below.

As you can see you can set the frequency of the payment, and what day of the month or year you would like the payment charged. This is handy as clients cash flow will likely be lumpy so you can choose a date that suits them.

Once you hit “Create Subscription,” this is sent to the client for approval via email, which you enter on the next screen.

The GoCardless subscription template set up screen.

 A bit more about GoCardless, the company…

GoCardless was founded by three Oxford university students 13 years ago (2011). They are headquartered in London.

As of 2022, the platform processes $30 billion worth of transactions annually and operates in the UK, EU, Australia, NZ, Canada, and the US. The platform is used by over 85,000 SME’s and large corporates.

GoCardless was valued at $2.1 billion in 2022.

At the end of the day….

In summary, we’ve been solely using GoCardless to collect our clients fees for the past year and can only say good things about the platform.

If you are looking for a more complex system that has more functionality, then GoCardless is probably not for you and I’d recommend you try Stripe, however GoCardless nails the simple operator that does not have a huuuuuuuge amount of varying transaction amounts to process.

If you charge a fixed monthly or annual fee, this is the platform for you.