Collecting Payments with Modulr — Use-Case Guides
Overview
Modulr's Collections Hub gives you multiple ways to collect payments from your customers: Direct Debit, Pay by Bank (Payment Initiation Service), Variable Recurring Payments (VRP), and bank transfer receipt into named accounts.
The Modulr API Reference documents every endpoint in detail. These guides show you how to put the endpoints together — the sequencing, timing, decision logic, and failure handling you need to build a working collections integration for your specific use case.
Each guide:
- Walks through a real-world payment pattern end-to-end
- Explains when and why to call each endpoint, not just how
- Provides contextual sample payloads using realistic business data
- Covers the operational knowledge you need — Bacs cycle timing, failure handling, customer communication touchpoints
- Links to the API Reference for detailed endpoint and parameter documentation
Which guide do I need?
"I want to collect regular payments from my customers" → Set Up Recurring Collections — Direct Debit setup for fixed and variable amounts, plus an overview of VRP and PIS standing orders as alternative methods
"I want to collect daily / weekly / monthly payments from my customers" → Set Up Recurring Collections — Direct Debit setup for fixed and variable amounts, plus an overview of VRP and PIS standing orders as alternative methods
"I need to collect loan repayments from borrowers" → Set Up Recurring Collections — Direct Debit setup for fixed and variable amounts, plus an overview of VRP and PIS standing orders as alternative methods
"What happens when a payment fails? How do I recover it?" → Failed Payment Recovery: Direct Debit → Pay by Bank — failure detection, ARUDD reason codes, dunning, DD retry, and Open Banking fallback
"I want to build an automated fallback when a payment fails" → Failed Payment Recovery: Direct Debit → Pay by Bank — failure detection, ARUDD reason codes, dunning, DD retry, and Open Banking fallback
"I want to do both — set up recurring collections and handle failures" → Read both guides in sequence. The recovery guide picks up where the setup guide ends.
"I want to collect a one-off payment" → More detail coming soon. In the meantime, see the Pay by Bank getting started guide for instant one-off payments.
"I want to use VRP as my primary collection method" → More detail coming soon. In the meantime, see the VRP getting started guide. The Recurring Collections guide includes an overview of when VRP is the right choice.
Collection types at a glance
These are the core payment patterns most businesses need to support. Each maps to one or more Modulr payment methods.
| # | Collection Pattern | Example Use Cases | Primary Methods | Guide |
|---|---|---|---|---|
| 1 | One-off payment | Invoice, outstanding balance, deposit | PIS (Pay by Bank), Bank transfer into named account | Coming soon |
| 2 | Recurring fixed amount | Subscriptions, memberships, fixed repayment plans | Direct Debit, VRP, PIS standing order | Recurring Collections guide |
| 3 | Recurring variable amount | Repayment plans, usage billing, utilities | Direct Debit, VRP | Recurring Collections guide |
| 4 | Failed payment recovery | Retries, dunning, rail-switching (DD → Pay by Bank) | DD retry, PIS fallback, VRP fallback | Recovery guide |
| 5 | Prepayment / top-up | Wallet funding, prepaid balances, deposits | PIS, Bank transfer, VRP | Coming soon |
| 6 | Ad-hoc / partial payment | Early settlement, overpayments, extra payments | PIS, FPS PayIn, Bank transfer | Coming soon |
Most real-world integrations combine patterns. A lender, for example, uses Type 2 or 3 for monthly repayments and Type 4 when a repayment fails. The guides are designed to be read in combination.
Key concepts
These terms appear throughout the guides. If you're new to UK payments, start here.
| Term | What it means |
|---|---|
| Direct Debit | A UK payment scheme (run by Bacs) that lets you pull money from a customer's bank account, with their prior authorisation (a mandate). |
| Mandate / DDI | The customer's authorisation for you to collect Direct Debits. Must be set up before any collection. |
| SUN | Service User Number — your unique identifier for collecting Direct Debits, assigned by Bacs during onboarding. |
| Bacs cycle | Direct Debits process on a 3-day cycle. Day 1: submission. Day 2: processing. Day 3: settlement. Rejection window closes Day 5–6. |
| ARUDD | Automated Return of Unpaid Direct Debits — when a DD collection is rejected by the payer's bank (e.g. insufficient funds). |
| PIS / Pay by Bank | Payment Initiation Service — an Open Banking payment where the customer authorises an instant transfer from their banking app. |
| VRP | Variable Recurring Payments — an Open Banking method allowing recurring payments of varying amounts under a single consent. |
| Rail-switching | Changing payment method mid-flow (e.g. DD fails → switch to Pay by Bank) to recover a failed payment. |
| Dunning | Communicating with a customer about a failed payment and offering them a way to pay. |
API reference — quick links
These guides reference the following Modulr API documentation. Each guide links to the relevant pages at the point you need them.
Direct Debit Collections: Overview · Getting Started · Setting up Mandates · Starting Collections · Receiving DD Collections
Pay by Bank (PIS): Overview · Getting Started · Single Immediate Payments · Supported Banks
VRP: Overview · Getting Started · VRP Consent
Webhooks: Notifications Overview · Mandate Status · DD Collection · Inbound Payment
Platform: API Reference · Authentication · Sandbox Access