ING credit transfers, direct debits and reporting

SEPA Direct Debit

The SEPA Direct Debit is a payment instrument for initiating domestic and cross-border collections in euro in a similar way throughout the 34 SEPA countries.

ING currently offers SEPA Direct Debit initiation in 12 countries in the SEPA area. SEPA Direct Debit enables businesses to collect money in the SEPA area from a single country and a single account. SEPA Direct Debit is a cost-effective and time efficient product and allows the creditor to easily manage and predict his or her liquidity position. There are two different types of SEPA Direct Debit schemes available: the SEPA Direct Debit Core and Business-to-Business (B2B).

 

SEPA Direct Debit Core
It is possible to use the SEPA Direct Debit Core for consumers and non-consumers. The SEPA Direct Debit Core can be one-off or a recurrent collection. For the SEPA Direct Debit Core an eight week period of unconditional refund by the debtor applies.

 

SEPA Direct Debit B2B
The SEPA Direct Debit B2B can only be used by and between businesses. There is no right for refund for the debtor after the SEPA Direct Debit B2B is processed. Although the timelines are shorter compared to the SEPA Direct Debit Core scheme, the limited coverage due to the optional nature of the B2B scheme could be an impediment for businesses using the SEPA Direct Debit B2B.  Besides issuing new mandates for the collection of SEPA Direct Debit B2B, the debtor is required to make a registration (consent) of the mandate at the debtor bank for the first collection date.

 

Initiation formats SEPA direct debit
Although the initiation XML format for SEPA Direct Debit is a standardised format (EPC guidelines:XML ISO 20022), the formats of XML initiation files for SEPA Direct Debit can differ between countries and between banks. Therefore each country has his own specific guideline for SEPA Direct Debit Core and B2B initiation formats. In most countries there is also a specific ING appendix for the SEPA Direct Debit Core and B2B format file. For more information see initiation formats or get in touch with our local office.

 

SEPA 'R' messages
Possible exceptions to the normal processing of a SEPA Direct Debit collection are reported on the account statement through a 'R' message. The 'R' message is used to indicate on which moment (pre-settlement or after settlement) during the processing, the transaction is rejected. This is done with the 'R' type. Next to that the reason code indicating the reason of failure is also indicated. The moment of the failure of the direct debit is essential to decide what sequence type the next direct debit should have. The different possible 'R' messages are: (pre-settlement) request for cancellation, request for revocation, refusal, reject, (after settlement) refund, reversal and return.


For non-euro countries in the SEPA area with a SEPA compliance deadline of October 2016, domestic initiation formats for collections are still available. Contact your country office about the use of local initiation formats or other domestic questions via ingwb.com.

 

SEPA Direct Debit - Pre-requisites
In general the following pre-requisites for you as a creditor apply for using SEPA Direct Debit products:

  • There must be a signed contract between the creditor and ING. Important parts of the SEPA Direct Debit contract are the limits for the collection, for instance the transaction and batch limits during a certain period. While initiating the collection, the creditor can’t exceed the contract limits otherwise the transaction or batch will not be executed. Contact your local office for the country specific details of the SEPA Direct Debit contract.
  • As a creditor you need to obtain a creditor identifier (id). This identification is a unique combination of characters and must be stable in time to enable the debtor to return to the creditor for any (unauthorised) transactions, complaint etc. The composition and application process of the creditor id differs per country.
  • There must be an agreement between debtor and creditor, this is called a SEPA mandate and is issued by the creditor. The SEPA mandate includes specific compulsory SEPA content.
  • As a creditor you need to inform your debtors through a pre-notification about forthcoming direct debits to their account at least 14 days in advance.

 

Failed SEPA Direct Debit transactions
An important aspect of the SEPA Direct Debit is the processing of failed transactions. For this R-messages are used in reporting to indicate why a transaction could not be processed. An R-message consists of a Reason Code indicating the ‘why’ and Reason type illustrating the type of R- message being refusal, reject, refund, reversal, revocation and return. These reporting functionalities of the SEPA Direct Debit are discussed in the reporting section of this website.

 

SEPA Direct Debit mandate
There are different templates available for mandates SEPA Direct Debit Core, Cor1 and B2B per country. It is also possible to design your own mandate.

 


FAQ SEPA Direct Debit

Which banks are reachable for SEPA Direct Debits?

Banks that were offering domestic direct debits on the debtor side prior to the introduction of SEPA Direct Debits are obliged to be reachable in the SEPA Direct Debit scheme. It is important therefore to verify which banks are reachable for SEPA Direct Debit Core and SEPA Direct Debit B2B.

The SEPA Direct Debit B2B scheme is optional and banks can decide whether to offer this service or not on the debtor side. Each bank can choose whether to offer services to creditors.

ING offers the SEPA Direct Debit B2B. A list of other banks that currently offer direct debits on the debtor side can be found at www.ebaclearing.eu.

What is pre-notification and how must it be communicated?

The creditor must inform his payers about forthcoming direct debits to their account at least 14 days in advance. This is called pre-notification. Debtors and creditors may agree to other time limits if they wish. For example, with a recurrent direct debit, parties can agree to only send a pre-notification once a year.

There are no rules concerning the format of the pre-notification, so the debtor and the creditor can agree on how it will be sent. For example, it could be a message on the invoice in which states the collection date.

Because the debtor must also be informed of the creditor id and mandate reference before the first direct debit, we advise you to mention these in the pre-notification.

What happens if my debtor has insufficient funds in his account?

If your debtor has insufficient funds, you will receive an R-message that notifies you that the debit transaction was not processed successfully, subsequently you have to re-submit the transaction.

Please note that in most cases this concerns the R-message: AM04 (the Netherlands, France, Ireland, Italy, Portugal and Spain). But in Belgium, Germany and Austria ING reports MS03 due to regulatory reasons.

What should a SEPA mandate comply with?

The European Payment Council has not determined rules on the lay-out of SEPA mandates, but it is compulsory to show the following information for the SEPA Direct Debit Core and B2B:

  • SEPA logo or word ‘’SEPA’’
  • Mandate reference, to be filled in by the creditor
  • Text in which the debtor authorises the creditor and his own bank to withdraw money from his bank account.
  • Creditor name, address and country
  • Creditor ID
  • Debtor’s account number (IBAN)
  • Debtor’s BIC
  • Debtor’s name, address and country
  • Place and date of signing
  • Debtor’s signature
  • For a recurrent mandate:
    - State that it is a continuous mandate
    - Refund period & explanation
  • For a one-off mandate:
    - State that it is a one-off mandate
    - Refund period & explanation

On the website you will find some examples of mandate lay-outs for different countries.

How must changes in mandates need to be treated?

Both debtor and creditor are responsible for implementing changes to mandates. Mandates must be changed for any of the reasons stated below. These changes must also be communicated to the debtor, making it clear who the payee is to avoid potential disputes when collecting payments:

  1. The creditor changes the unique characteristics of the mandate because of internal organisational changes or restructuring.
  2. The creditor has begun using a new creditor ID. The changes may occur following a merger, take over, separation or a major restructuring.
  3. The creditor has changed names.

The following reasons apply to changes in a mandate, in these instances the debtor initiates the changes and needs to inform the creditor.

  1. The debtor changes bank account at the same bank.
  2. The debtor changes banks and therefore the account number also changes.

The creditor must always put all changes in writing, record them and provide them when the next payment is due. Details of the changes are to be provided by adding the old and new information to the mandate within the XML message.

What mandate management services are available?

There are various services available in het market for mandate management services. These companies offer to maintain and supply the mandates for the SEPA Direct Debit.

What is a mandate reference and how must it be constructed?

The mandate reference is a distinguishing number that is generated by the merchant and which must be added to the SEPA mandate.

There are no rules that determine the creation of the mandate reference, which can be developed by the creditor themselves. However, it must comply with the following two criteria:

  • The mandate reference, in combination with the Creditor ID, must form a unique combination. This makes every mandate unique and easy traceable.
  • It can contain no more than 35 characters.

What happens when debtors withdraw their mandate?

If the debtor withdraws the mandate, then the creditor no longer has the right to collect the payment. For SEPA Direct Debit Core, it is not compulsory for the debtor to register the mandate with the bank. This obligation only applies to SEPA Direct Debit B2B. The scheme has no rules requiring a creditor to be informed by the bank when a debtor withdraws their mandate. The withdrawal of a mandate is normally the result of a contract between creditor and debtor coming to an end.

For SEPA Direct Debit B2B the following rule applies:
If the mandate is no longer registered and the bank receives a request for a SEPA Direct Debit B2B, then the debtor’s bank will not accept the request and no money will be transferred to the creditor.

It is also possible for the debtor to freeze his account number for a specific creditor or for all collections on a specific account number. To disable collections on your account number or for a specific creditor, contact your local ING office.

Is it necessary to digitalise mandate information?

Yes, it is necessary to digitalise a mandate. Part of the XML file is the so-called Mandate Related Information (MRI). In other words, specific information must be delivered with the payment instructions, and this can only be done if the information from the paper mandates has been digitalized.

Fields that need to be digitalised are:

  • Mandate reference
  • Debtor’s name and address
  • Debtor’s IBAN
  • Identification of the underlying contract
  • Debtor’s BIC
  • Creditor ID
  • Creditor's name and address details
  • Date of signing
  • Transaction type
  • If applicable, the reason for changes to the mandate

What is mandate related information?

Mandate related information (MRI) is information that the creditor must transmit to the creditor bank along with each collection. This is the information from the mandate that is digitalised by the creditor. The following details are compulsory MRI:

  • Creditor ID
  • Mandate reference
  • Debtor’s IBAN and BIC
  • Debtor’s name and address
  • Date of signing
  • Type of mandate (recurrent or one off)

Which sequence types are used for the SEPA Direct Debit?

The SEPA Direct Debit consists of the following sequence types:

  • One Off
  • Recurrent (optional usage of sequence type First)
  • Last