Direct Debit - Unreferenced Refunds
UK Direct Debits are by their nature unreferenced - there is no payment reference created for a payment. The UK Direct Debit process (BACS) accepts a mandate id, bank details and an amount when you submit a payment (or refund) request to the banking system. There is no concept of a reference refund.
This makes the lack of support of un-referenced refund against the Direct Debit a little frustrating. There is no technical limitation and unreferecend refunds are supported by the underlying gateway and banking systems (this is possible on go-cardless for example).
When you have a business at scale, supporting un-reference refunds on one channel (eg credit cards) and not on another channel (eg direct debit) causes a number of business challengs that are not very easy ( or cheap to address). The biggest challenge comes in when you are doing a migration and you migrate millions of customers into the system. If these customer are direct debit customers and they want a refund, then the only choice you have is to generate external refunds. This then has a knock on effect to the number of people that you need to support this manual process, as well as additional cost of mailing cheques out. This becomes a costly exercise and does not make an efficient business model.
It would be good to get a view if supporting un-referenced refunds is on roadmap as the lack of support is challenging. There is no tecnical limtiation and it would seem sensible to support this to enables businesses to make their processes more efficient.
This is paricularly important where a business has a signficant nubmer of direct debit customers. This is common (outside of the US), for example a UK B2C business could have 50% (or more) of their cutomer base on direct debit.
This is an important feature to support B2C businesses outside of the US.
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