A direct debit is an instruction that lets an organisation collect payments from an account holder, with the amount and date set by the organisation. It is used for bills that vary, and is covered by the Direct Debit Guarantee.
In one line: A direct debit lets a company pull varying amounts from an account under the payer's authority, backed by a refund guarantee.
How a direct debit works
After the account holder signs a mandate, the biller can request different amounts on agreed dates, for example a quarterly energy bill that changes with usage. The bank pays each request from the named account.
A broadband firm might collect 32 GBP one month and 41 GBP the next after a price change. The biller must give advance notice of the amount and any change under the scheme rules run by Bacs.
The Direct Debit Guarantee entitles the payer to an immediate refund from their bank if a payment is taken in error or without proper notice.
Direct debit vs standing order
A direct debit is controlled by the organisation collecting it and can vary. A standing order is controlled by the payer and is always a fixed amount.
Only direct debits carry the Direct Debit Guarantee, which is why variable bills typically use them while fixed transfers such as rent often use a standing order.
Primary source: Direct Debit Guarantee (Bacs, Pay.UK)