Best practices for setting up a mandate
Avoid misunderstandings when setting up a SEPA Direct Debit mandate- some 'best practices' and tips from our expert Dominique.
The set-up of a mandate must comply with a number of rules. These rules are not always strictly observed by some creditors. To avoid misunderstandings, we list some 'best practices' here. This way you know what you need to take into account when setting up a SEPA Direct Debit mandate.
These principles, drawn up at the end of 2017, are used as a reference base by the MOB (Maatschappelijk Overleg Betalingsverkeer) in the Netherlands, but they also apply to other countries such as Belgium.
The 4 main principles to bear in mind when setting up a mandate, are:
Acceptable way of signing
Easy revocation option
It must be very clear that a mandate is issued and for what . Both elements must clearly be mentioned during the signing process. Preferably, without scrolling, in the same screen and readable on all devices. An end customer must always be able to get the mandate afterwards.
This also promotes the success ratio when executing the mandate. The end customer easily recognizes what exactly it is about. This reduces the number of discussions and promotes the trust in this payment method.
Two different sources unambiguously enumerate the formal and technical requirements (the annex to the SEPA-Regulation EU 260/2012 and the SDD Rulebook paragraph 4.7.2. DS-01 The mandate – For the SDD Rulebook CORE Direct Debits).
In brief, the completeness can be checked on the basis of the following elements:
For the Netherlands, SEPA Incasso Machtiging must be mentioned on top in the title (or SEPA Bedrijven Incasso Machtiging for companies) while for Belgium this should beMandaat SEPA Europese Domiciliëring ( or Mandaat SEPA B2B Europese Domiciliëringfor companies).
In addition, the following fields must be filled in:
- Mandate number
- Debtor data - Name - Address_(Although this is not mandatory for transactions within the EEA, we strongly recommend to mention it. If a customer does not pay afterwards despite having signed a valid mandate, it is easier when his address is mentioned on the document_**).** **-**Zip code and city - Country - IBAN - BIC (this is not mandatory for transactions within the EEA)
- For the creditor - Name of the company - Address - Zip code and city - Country - The CreditorID – usually starting with NL99ZZZ for the Netherlands and with BE99ZZZ for Belgium
- Regarding the direct debit and the contract itself **-**One-off or recurrent payment - Reference to the underlying contract. This can be the identification number of the underlying contract combined with a description of the contract.
- An indication of the place and date of signing.
3) The legal texts regarding the mandate and the possibility of a chargeback within eight weeks (for CORE) or the deviating conditions in the case of a B2B mandate.
If one of the guidelines mentioned above is not followed, then the mandate is not valid. As a supplier you run a 13-month refusal risk and also could additionally be fined by the bank. In theory, the bank is even obliged to create a reserve for these risks as it can be held liable in the event of a bankruptcy.
3. Acceptable way of signing
The mandate must be properly signed. This must be done in a safe and acceptable manner. This is simple on paper: a "wet signature" is sufficient. For a B2B mandate, the bank of the payment service provider (the debtor bank) is always involved. The debtor bank can be involved in the digital agreement (eg by using digitaal incassomachtigen in the Netherlands or Twikey in Belgium) but this is not absolutely mandatory. According to the law, an electronic signature meeting the minimum legal requirements is also an option. These rules may vary from one country to another.
4. Easy revocation option
The customer must be able to easily cancel a mandate, whether it is digital or on paper. Ideally, he should be able to do this in the same way as the one he used to sign the mandate. There is only one method in Europe which allows him to do so and this is through our own Twikey platform. Digitaal incassomachtigen in the Netherlands does not support this function but the extra Twikey layer does. In Belgium this is provided by default in the Twikey system and we even go one step further.For a number of banks, the revocation is also automatically registered at the bank!
Other options are:
- to integrate this in a kind of “Myportal”.
- to do this via the e-banking application of the bank.
- to contact the creditor call center.
- exceptionally, this could also be communicated by registered letter.
Implementation of mandate acceptance rules
Since the foundation of Twikey in 2013, we have always applied these rules strictly. By doing so, we offer companies an easy way to immediately comply with all the rules mentioned above. Thanks to the smooth and fast onboarding, there are no concerns about whether or not the direct debit rules are correctly implemented.
When setting up an own system or choosing a good solution, it is important that the 4 rules are observed. A solution that is limited to the "signing" of a contract alone is not enough.
The original document of the MOB in the Netherlands can be found on this page.
The MOB or Maatschappelijk Overleg Betalingsverkeer was founded in 2002 and is supervised by the Dutch Bank. It includes representatives from a number of stakeholders in the payment business, such as banks, payment service providers (PSP), umbrella organizations of retailers, consumers and organizations of people with disabilities.