Summary
You can collect invoices by direct debit in New Zealand without applying to your bank as a direct debit initiator. Connect Stripe and turn on NZ BECS Direct Debit. Your customer accepts a Direct Debit Authority from the pay link on your invoice, and Stripe New Zealand Limited acts as the initiator. Stripe reports success or failure 2 business days after it submits the debit.
- What the customer agrees to: A Direct Debit Authority (DDA) under Stripe's NZ BECS Direct Debit terms. Stripe shows the terms, collects the acceptance and emails the confirmation and the debit notice.
- What it costs: Stripe's standard New Zealand price is 1% + NZ$0.40 per payment, capped at NZ$4.00. Domestic cards are 2.65% + NZ$0.30. Paidnice adds no fee on any plan.
- What to watch: Stripe's default limit is NZ$10,000 per payment and NZ$10,000 a week at first. A customer can dispute a debit for up to 9 months after the first one under the authority.
You send a reminder, and your customer starts a bank debit from the pay link. Before it clears, they also pay the invoice by bank transfer, and your bookkeeper marks it paid. Then the debit lands too, and you have a double payment to refund.
We have seen customers hit this with bank debits, because nobody told them what "pending" means. Here is how direct debit works for a New Zealand small business that invoices from Xero or QuickBooks: who can collect it, what your customer signs, how long a debit takes, what it costs and what to do when one fails.
Paidnice is accounts receivable automation for businesses on Xero and QuickBooks Online. It offers direct debit on invoices in six bank schemes through Stripe, including NZ bank debit.
Free: Payment reminder email templatesCopy the reminder emails for before, on and after the due date.How direct debit works in New Zealand
A direct debit lets a business take a payment from a customer's bank account once the customer has authorised it. Payments NZ says the initiator "lets you know in advance the amount and date the payment will occur" (Payments NZ).
The debits run through BECS, the Bulk Electronic Clearing System, which Payments NZ says "governs how direct debits, automatic payments, bill payments, and direct credits work" (Payments NZ BECS). Stripe calls the method NZ BECS Direct Debit. It is a separate scheme from Australian BECS.
Do you need to be a direct debit initiator?
Not if you collect through Stripe. To collect direct debits yourself, your bank has to approve you. BNZ says "we need to approve your organisation as a direct debit initiator, and give you an authorisation and approval code" (BNZ). After that, you build and upload the collection files yourself.
With Stripe, Stripe is the initiator. Its customer terms say "Stripe New Zealand Limited (NZBN 5639473) ("Stripe") acts as initiator on Merchant's behalf" (Stripe NZ BECS terms).
You still need Stripe's approval. Stripe lists the method as "Approval required" and asks for extra identity checks when you request it in your payment method settings (Stripe NZ BECS docs). Your Stripe account must be in New Zealand, and the customer must pay in NZD from a New Zealand bank account.
How to collect an invoice by NZ bank debit
- Connect Stripe to Paidnice and turn on NZ BECS Direct Debit in your Stripe payment methods.
- Send the invoice from Xero or QuickBooks. Paidnice adds a pay link to every reminder, SMS and statement for it.
- The customer opens their payment portal and picks one invoice, several, or the whole balance.
- They choose bank debit, enter their name, email and bank account number, and accept the Direct Debit Authority.
- The debit shows as pending. Paidnice records the payment against each invoice once Stripe confirms it.
The Direct Debit Authority your customer accepts
Stripe says NZ BECS Direct Debit "calls this authorization a Direct Debit Authority, or DDA", and that its payment form will "display the New Zealand BECS Direct Debit Service Terms and Conditions and collect the customer's acceptance". You do not need a paper form or a signature.
Stripe also sends the emails the rules require. You must confirm the authority by email within 5 days and give notice of each debit no later than the day it happens. By default, Stripe sends the confirmation straight away and a notice with the amount and date of every debit.
The customer can cancel the authority through their bank or through you. Stripe's terms ask for written notice "no less than 2 business days before the date the direct debit is due".
How long a debit takes, and the limits
Stripe says settlement takes "up to 2 business days (T+2)", and the result arrives at the same time as the funds. A debit created after 6:20pm New Zealand time, or on a non-business day, is submitted on the next business day.
Until Stripe confirms it, the payment is pending, and a second payment sent in that time becomes a double payment. Tell customers that a pending debit is already on its way, so they do not pay the same invoice a second way.
Stripe also sets limits. "The default per-transaction limit is 10,000 NZD", and the initial weekly limit is NZ$10,000 across all NZ bank debits, rising as you build a history. If one invoice, or one busy week, is larger than that, ask Stripe for a higher limit before you offer bank debit on it.
What NZ bank debit costs next to a card
Stripe's standard New Zealand price for NZ BECS Direct Debit is "1% + NZ$0.40" with a "NZ$4.00 cap", plus NZ$6.00 for a failed payment and NZ$6.00 for a disputed one. Domestic cards are "2.65% + NZ$0.30" (Stripe New Zealand pricing).
| Invoice | Domestic card | NZ bank debit |
|---|---|---|
| NZ$300 | NZ$8.25 | NZ$3.40 |
| NZ$2,480 | NZ$66.02 | NZ$4.00 |
| NZ$9,000 | NZ$238.80 | NZ$4.00 |
The cap applies to every invoice over NZ$360, so the larger the invoice, the more a bank debit saves. Paidnice adds no fee to a direct debit on any plan. For a wider comparison by country, see whether card or direct debit costs less.
When a debit fails or is disputed
A debit fails when the account has too little money, is closed, or the details are wrong. Stripe says a permanent failure makes the mandate inactive, so the customer has to accept a new authority before you debit them again.
Stripe says a customer can dispute a debit "for up to 9 months from the date of the first payment" if they are not satisfied the authority covers it. They can also dispute one payment for up to 120 days if you did not send the debit notice, or the notice was wrong. Disputes are for the full amount.
Stripe warns about refunds during a dispute. If you refund while the customer's bank also processes a dispute, the customer can get two credits. Tell the customer you are refunding, so they do not go to their bank as well.
In Paidnice, a failed debit shows on the Payments page and the invoice is frozen, so no reminder or automatic late fee goes out until you fix it with the customer. Charge a fee manually if your terms allow. The steps by reason are in what to do after a failed direct debit.
How Paidnice handles NZ bank debit
- Bank debit on the pay link: every reminder, SMS and statement links to the portal, where the customer pays by card or bank debit through Stripe.
- Every attempt on one page: the Payments page shows pending bank debits, failed and abandoned payments, payments waiting on the customer and payments that did not sync to the ledger.
- Payment plans by bank debit: on a payment plan, customers can turn on Autopay with a saved bank account, and each instalment is collected on its date (Pro and above).
- Quieter reminders for debit payers: customers ask us how to stop chasing people who already pay by direct debit. Put those customers in their own group, or tag them, and give that group lighter reminders or none.
- Australian customers pay through BECS Direct Debit in Australia, a separate scheme that Paidnice also supports through Stripe.
💡 Paidnice insight
Look at the Payments page before you chase or refund. A pending NZ bank debit means the money is on its way, and a second payment sent during those 2 business days is the usual cause of a double payment.
Frequently asked questions
Who runs direct debit in New Zealand?
Payments NZ sets the rules for BECS, the system banks use to clear direct debits. Banks approve their own direct debit initiators.
Can a small business collect direct debits without bank approval?
Yes, through a provider. With Stripe, Stripe New Zealand Limited is the initiator, and you apply to Stripe for NZ BECS Direct Debit instead of to your bank.
How much notice do I have to give before a debit?
Stripe's terms say you must give written notice of the amount and date no later than the date of the debit. Stripe sends that notice by email. A change to the frequency or amount needs at least 10 days' notice.
How long does an NZ bank debit take?
Stripe says up to 2 business days after it submits the debit. Paidnice records the payment in Xero or QuickBooks once Stripe confirms it.
Can I debit an Australian customer's account this way?
No. NZ BECS Direct Debit takes NZD from New Zealand bank accounts only. Australian customers use the Australian BECS scheme, which Paidnice also supports through Stripe.
Paidnice features in this article
About the editorial team
Ashley is a co-founder and lead developer of Paidnice and has built accounting software for more than 10 years. He builds the ledger connections that put reminders, late fees and payments into Xero, QuickBooks and ERPs such as NetSuite and Business Central. Before Paidnice he co-founded A2X, ecommerce accounting software for Xero and QuickBooks.
App of the Year