Authorization
A direct debit instruction must in all cases be supported by some sort of authorization for the payee to collect funds from the payer's account. There are generally two methods to set up the authorization:
One method involves only the payer and the payee, with the payer authorizing the payee to collect amounts due on his or her account. However, the payer can instruct his or her bank to return any direct debit note without giving a reason. In that event, the payee has to pay all fees for the transaction and may eventually lose his or her ability to initiate direct debits if this occurs too often. However, it still requires the all account holders (not merely the payer) to watch statements and request returns if necessary, unless they have instructed their bank to block all direct debits.
The other method requires the payer to instruct his or her bank to honour direct debit notes from the payee. The payee is then notified that he or she is now authorised to initiate direct debit transfers from the payer. While this is more secure in theory, it can also mean for the payer that it is harder to return debit notes in the case of an error or dispute.
Read more about this topic: Direct Debit