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.