SEPA Direct Debit mandates are authorizations given by payers to payees that allow for the automatic collection of payments from the payer's bank account on a recurring basis. These mandates are a key component of the SEPA Direct Debit scheme, as they provide an official and standardized way for payees to collect payments from their customers across the SEPA region.
A SEPA Direct Debit mandate typically includes the following information:
- Legal mandatory text defined by the EPC
- Name and address of the payer and payee
- Payer's bank account information + optional BIC
- Payee's creditor ID
- Type of mandate: CORE or B2B
- Recurrent or one-off mandate (one-off is almost not used)
- Mandate reference number
- Date of mandate signature
- Signature of the payer
Once a SEPA Direct Debit mandate has been established, the payee can submit payment requests to the payer's bank on a recurring basis, without the need for further authorization. This allows for the automatic collection of payments, which can help to reduce administrative costs and improve cash flow for businesses and organizations.
It can be signed offline (on paper) or online with the correct digital signatures. Online allows to add extra controls on the mandate itself.
It's important to note that SEPA Direct Debit mandates are governed by strict rules and regulations. These rules are designed to protect the rights of payers and ensure the secure and reliable operation of the SEPA Direct Debit scheme.
The SEPA Direct Debit scheme is governed by a set of rules and regulations established by the European Payments Council (EPC), in cooperation with national regulatory authorities and other stakeholders. These rules are designed to ensure the secure and reliable operation of the SEPA Direct Debit scheme and protect the rights of payers and payees.
Some of the key legislation related to SEPA Direct Debit mandates includes:
- Regulation (EU) No 260/2012: This regulation established the legal framework for SEPA and set the end date for the migration to SEPA Direct Debit and SEPA Credit Transfer schemes across the European Union.
- EPC SEPA Direct Debit Core Rulebook: This rulebook sets out the technical and operational rules for SEPA Direct Debit transactions, including requirements for the establishment and management of SEPA Direct Debit mandates.
- EPC SEPA Direct Debit Business-to-Business Rulebook: This rulebook provides additional rules and guidelines for SEPA Direct Debit transactions between businesses and other organizations.
In addition to these regulations, individual countries may have their own laws and regulations related to SEPA Direct Debit mandates. It's important for businesses and organizations to stay up-to-date on these regulations and work with their banks and payment service providers to ensure compliance with all relevant requirements. You can fill in your mail-address beneath this page to be kept up to date with all large impact changes.
Mandatory information SEPA Direct Debit mandates
SEPA Direct Debit mandates require the inclusion of specific information, as set out in the European Payments Council (EPC) SEPA Direct Debit Core or B2B Rulebook. This information is mandatory and must be provided by the payer before the first SEPA Direct Debit transaction is initiated.
The mandatory information that must be included in SEPA Direct Debit mandates includes:
- Legal text depending (defined by EPC) on the Core or B2B use case.
- Creditor Identification: The unique identification number of the creditor, assigned by the creditor's bank.
- Creditor Name: The name of the creditor.
- Creditor Address: The address of the creditor.
- Mandate Identification: The unique identification number of the mandate, assigned by the creditor.
- Mandate Date: The date on which the mandate was signed by the payer.
- Debtor Name: The name of the payer.
- Debtor IBAN: The International Bank Account Number (IBAN) of the payer's account.
- Debtor Bank Identifier Code (BIC): The BIC of the payer's bank. (optional in most of the cases but recommended)
- Payment Occurrence: Recurrent or one-off
- Type of mandate: CORE or B2B
- Optional Reference Information: Any additional information required by the creditor to identify the payment, such as an invoice number or customer account number.
By including all of this mandatory information in SEPA Direct Debit mandates, creditors can ensure that they have the necessary authorization to initiate Direct Debit transactions from their customers' accounts.
If the above information is not available in the mandate, the 13 month consumer protection is applied.
SEPA Rule book
The SEPA Rulebook is a set of guidelines and standards created by the European Payments Council (EPC) that governs the implementation of SEPA payment schemes. The SEPA Rulebook ensures consistency and interoperability across SEPA payment schemes, including but not limited to SEPA Credit Transfer, SEPA Direct Debit, and SEPA Cards.
The SEPA Rulebook outlines the rights and obligations of payment service providers (PSPs), payment service users (PSUs), and other stakeholders involved in SEPA payment transactions. It defines the technical and business requirements that PSPs must comply with to participate in SEPA payment schemes, including rules for data exchange, processing times, and settlement.
The SEPA Rulebooks are updated regularly to reflect changes in the European payments landscape, such as the introduction of new payment instruments and updates to regulatory requirements. PSPs and other stakeholders must stay up to date with the latest versions of the SEPA Rulebook to ensure compliance and successful participation in SEPA payment schemes.
The SEPA Rulebook is publicly available on the EPC website and can be accessed by anyone interested in learning more about SEPA payment schemes and their implementation. You can find the full set of rulebooks on the next EPC page: Sepa Rulebooks
SEPA mandates are legal agreements between the payer and the payee that authorize the payee to collect payments from the payer's bank account via SEPA Direct Debit. Once a SEPA mandate is established, the payee can initiate direct debit transactions on the payer's account without requiring further authorization for each payment.
Since SEPA mandates are legal agreements, they need to be archived for a certain period of time to ensure compliance with regulatory requirements and to provide evidence in case of disputes or audits. The specific archiving requirements for SEPA mandates may vary depending on the jurisdiction, but they generally require that the mandates be stored securely and accessible for a specified period of time.
The period of storage time is depending on two principles:
- The mandate needs to be stored as long as the payment relationship exists. So when one is customer for 20 years of a utility player, that utility player must have the mandate stored for at least 20 years.
- When the mandate is not used anymore, it can still be used for the next 36 months. As it is a "contract", the local legislation for the storage of contract applies. In some countries this is 10 years, in some other countries it can be less (e.g. 7 years). A practical rule which a lot of creditors use is to store it 10 years after last usage.
To ensure compliance with archiving requirements, creditors that handle SEPA mandates should implement secure and reliable storage systems, such as digital archiving solutions or physical storage facilities for paper. They should also establish clear policies and procedures for managing SEPA mandates, including procedures for retrieving and providing access to archived mandates when necessary.
Mandates that are digitally signed need to be stored in such way that modifications are not possible.
SEPA mandates can be signed on paper.
In the case of paper SEPA mandates, the payer must provide a signed paper mandate to the payee, authorizing them to collect payments from their bank account via SEPA Direct Debit. The paper mandate must contain all the mandatory information required by the SEPA Direct Debit scheme, such as the name and address of the payer and the payee, the payer's bank account information, and the mandate reference.
Once the payee has received the signed paper mandate, they can initiate direct debit transactions on the payer's account using the mandate. The payee must keep the original paper mandate on file (see the rules in the previous topic).
While paper SEPA mandates are still accepted and used by some payers and payees, electronic mandates are becoming increasingly popular due to their convenience, speed, environment friendliness and reduced costs. Electronic mandates can be created and signed digitally, eliminating the need for paper documents and allowing for faster processing times and easier archiving and retrieval of mandates.
An e-mandate, also known as a paperless direct debit mandate, is an electronic authorization that allows a payee to collect payments from a payer's bank account via SEPA Direct Debit. E-mandates are created, signed, and managed electronically, eliminating the need for paper documents and allowing for faster processing times and improved efficiency.
With e-mandates, payers can authorize direct debit transactions online or through mobile devices, without the need for printing, manually signing and sending paper mandates. The e-mandate process typically involves the payer completing an online form with their bank account details, which is then authenticated using a secure two-factor authentication process.
E-mandates offer several benefits over paper mandates, including faster processing times, reduced administrative costs, improved accuracy, and greater convenience for payers and payees. They also provide improved security and fraud protection, with advanced encryption and authentication protocols.
To implement e-mandates, payees need to implement themselves a safe and secure signing process or work with a third-party mandate service provider that offers e-mandate solutions. The payee must also comply with the relevant regulations and standards governing e-mandates, such as the European Payment Council's SEPA Direct Debit Core Scheme Rulebook and the General Data Protection Regulation (GDPR).
A lot of merchants don't implement SEPA e-mandates in the correct way. All those mandates are subject to 13 months refund right. The bank will additionally charge the merchant if a mandate was not correctly set-up and the end-customer complains.
A correct e-mandate is signed with SCA (Strong Customer Authentication) and contains all the information required for paper mandates. In the context of an e-Mandate, SCA requires at least two out of three beneath factors to be completed:
- Something you know (knowledge factor): This refers to something the customer knows, such as a password or PIN.
- Something you possess (possession factor): This refers to something the customer possesses, such as a mobile device or a smart card.
- Something you are (inherence factor): This refers to something the customer is, such as biometric data like a fingerprint or facial recognition.
Once a signature is applied this way, the merchant needs to proof (even 10 years later) that it is signed in the correct way and is not modified afterwards. When the mandate continues to be used it is also required to proof non-repudiation even 20 years later.
Banks are becoming more a more reluctant to accept merchants that don't want to comply with this rules when digitally activating e-mandates.
Advantages of paperless mandates or e-mandates
There are several advantages to using paperless mandates, also known as e-mandates, over traditional paper mandates. Here are some of the main advantages:
- Convenience: E-mandates can be created and signed online or through a mobile device, eliminating the need for printing, signing, and mailing paper forms. This makes the process more convenient for both payers and payees.
- Speed: E-mandates can be processed faster than paper mandates, as there is no need to wait for physical documents to be received and processed.
- Cost savings: E-mandates can save money on administrative costs associated with processing paper mandates, such as printing, mailing, and storage. For B2B mandates a mandatory visit to be bank is avoided when doing this fully digital.
- Reduced errors: Paperless mandates can reduce errors associated with manual data entry and paper-based processing.
- Enhanced security: E-mandates are typically more secure than paper mandates, as they use advanced encryption and authentication protocols to protect sensitive information. (e.g itsme, idin, emachtiging...)
- Better tracking: E-mandates can provide better tracking and visibility into the payment process, allowing payees to monitor payment statuses and reconcile payments more efficiently.
Overall, paperless mandates can offer significant advantages over traditional paper mandates, including greater convenience, speed, cost savings, and security. As such, more and more businesses are adopting e-mandates as a way to streamline their payment processes and improve efficiency.
Multi-channel SEPA Direct Debit mandates
Multi-channel SEPA Direct Debit mandates refer to the ability to create and manage mandates through multiple channels, such as online portals, mobile apps, or paper forms. This allows payees to offer a variety of options to payers to choose from, making the payment process more convenient and accessible.
For example, a payee may offer a paper form for payers who prefer to complete and sign a physical document, an online portal for payers who prefer to complete the process electronically, and a mobile app for payers who prefer to manage payments on their smartphone or tablet.
Multi-channel SEPA Direct Debit mandates can help increase the adoption of Direct Debit payments, as they allow payees to offer a wider range of options to payers, making it easier and more convenient for them to set up and manage payments. This can ultimately lead to higher payment acceptance rates, increased customer satisfaction, and improved cash flow for businesses.
SEPA Direct debit Mandates via website or within a customer portal
SEPA Direct Debit mandates can be created and managed via a payee's website through the use of e-mandates. E-mandates are electronic versions of SEPA Direct Debit mandates that can be completed and signed online, without the need for paper forms.
To set up SEPA Direct Debit mandates via a website, payees can integrate an e-mandate solution into their website, which allows payers to easily create and manage their mandates online. This can be done through a secure and user-friendly interface that guides the payer through the mandate creation process.
The process typically involves the payer entering their personal and bank account information, providing their consent to set up the mandate, and signing the mandate electronically using Strong User Authentication to apply their digital signature (e.g. Itsme, IDIN, etc...) or a one-time password sent to their mobile device.
Once the mandate is set up, the payee can use it to initiate Direct Debit payments from the payer's bank account, based on the agreed payment schedule. It a customer portal is used, this page can also include a payment history or the possibility to change the mandate information (eg. IBAN).
Setting up SEPA Direct Debit mandates via a website can offer several benefits, such as reducing paperwork, streamlining the mandate creation process, and improving the overall customer experience. It can also help businesses save time and resources by automating the mandate management process, leading to increased efficiency and accuracy.
SEPA direct debit Mandates via POS Point Of Sales
SEPA Direct Debit mandates can also be set up and managed via a point of sale (POS) system. This is a payment terminal or device that is used to process payments in a physical store or location.
To set up SEPA Direct Debit mandates via a POS system, the payee can integrate a Direct Debit management solution into their system, which allows customers to create and manage their mandates at the time of purchase in the shop.
The process typically involves the merchant entering the personal and bank account information into the POS system. The consent of the customer is ideally also performed at that moment (Eg. via a one-time password sent to their mobile device).
Once the mandate is set up, the customer can view and manage their mandate details through the payee's customer portal or by contacting the payee's customer support team.
SEPA Direct Debit mandates via invite mail
SEPA Direct Debit mandates can also be set up via invite mail. This involves sending an email to customers inviting them to set up a mandate for recurring payments.
The email typically includes a link to a web page where customers can enter their personal and bank account information, provide their consent to set up the mandate, and sign the mandate electronically using Strong User Authentication to apply their digital signature (e.g. Itsme, IDIN, etc...) or a one-time password sent to their mobile device.
Typically this can be combined with e-mail "campaigns" trying to convert a maximum of customers.
Setting up SEPA Direct Debit mandates via invite mail can offer several benefits, such as providing customers with a quick and convenient way to set up and manage their mandates, reducing the need for paper forms and manual processing, and improving the overall customer experience. It can also help businesses save time and resources by automating the mandate management process, leading to increased efficiency and accuracy. However, it's important to ensure that the invite mail complies with GDPR regulations and that customers personal information is securely stored and protected.
SEPA Direct Debit mandates via online payment
SEPA Direct Debit mandates can also be set up via online payments. This involves integrating the mandate setup process into the checkout flow of an online store or payment gateway.
When a customer initiates a purchase, they are presented with the option to pay using a one time payment method. This is sometimes called also the 1 or 2 cent verification option. If they choose this option, they are redirected to a secure payment web page where they can enter their personal and bank account information, accept the payment and meanwhile set up the mandate. A lot of payment service providers provide this service however it is very exceptional that the mandate is negotiated in the good way. In most of the cases the legal requirements are not fulfilled (like showing all the mandate details) and applying a real digital signature on it. Banks will be very reluctant to accept this method of signature. If the end-customer or the bank can show that not all requirements are fulfilled, 13 months of refund is possible.
Once the mandate is set up, the customer should be able to view and manage their mandate details through the payee's customer portal or by contacting the payee's customer support team.
SEPA Direct Debit Core Mandates are the most common type of mandate used for recurring payments in the Eurozone and can be used for consumers and businesses. This mandate enables the creditor to automatically collect payments from the debtor's account. The debtor is required to authorize the creditor to initiate the payment by signing a mandate. The mandate contains all the relevant information about the payment, such as the amount, frequency, and payment date.
SEPA Direct Debit Core Mandates can be used for both one-time and recurring payments, and they can be used for both consumer and business transactions.
SEPA Direct Debit Core Mandates are rather safe as they offer a good consumer protection. All SEPA Direct Debit Core transactions can be called back for at 8 weeks without questions asked. Most of the banks even offer the option in their eBanking application. If the mandate is not correctly negotiated, the refund period is 13 months.
This is something not always known to the public. Twikey did an investigation together with the University of Ghent in Belgium on that and it appeared that more than 87 % of the population doesn't know this!
What about moving from one bank to another? Can a Bank Switching Service help?
Yes, in some countries (like Belgium), the bank switching service allows to inform the merchant that a customer has moved from one bank to another and also informs the movement of the mandate credentials if the end-customer has chosen to move them.
A new signature is not needed in that case.
Ideally the backoffice of the payee takes this into account. If the payee uses a mandate service provider, this one can make the connection without needing extra setup.
Legal signatures for SEPA CORE Mandates
For SEPA Core mandates, a legal signature is required to authorize the payment. The signature can be in electronic or paper form and must be provided by the debtor, the account holder who is authorizing the payment.
In the case of paper mandates, the debtor's signature must be physically provided on the mandate form. For electronic mandates, a variety of options are available depending on the country and the bank. These options include using a digital signature, providing a scanned copy of a signed mandate, or using an online authentication process to verify the debtor's identity and intent to authorize the payment. (as long as it complies with the rules of Strong Customer Authentication).
SEPA Direct Debit B2B (Business-to-Business) mandates are used for commercial transactions between businesses. Unlike SEPA Direct Debit Core mandates, which can be used for both consumer and commercial transactions, B2B mandates require a registration at the bank before execution of a first collection and is subject to fewer consumer protection regulations. Once a B2B collection has been done and the money is transferred from the payer to payee there is no refund right.
B2B mandates are used a lot in sectors like leasing, fuel, peer to peer lending, delivery of goods, interim.
Submitting a SEPA Direct Debit B2B mandate through the bank
Submitting a SEPA Direct Debit B2B mandate through the bank involves several steps. Here's a general overview of the process:
- Create a correct mandate form: The mandate needs to be setup conform the EPC rules on how to make a B2B mandate. It contains the necessary legal texts and the mandatory fields.
- Fill out the mandate form: Once you have the mandate form, you will need to fill it out with all the necessary information. Make sure to double-check all the details and ensure that everything is accurate and up-to-date.
- Submit the mandate form: Once the mandate form is filled out, the payer will need to submit it to his bank. You can usually do this in person at a branch. Very exceptionally, banks also allow you to submit the form online through their banking platform.
- Wait for approval: After submitting the mandate form, the bank will review it to ensure that all the information is correct and complete. Once the mandate is registered at bank side, your account is open to start collections.
- Inform the payee: As long as the creditor is not informed, he is not really able to execute collections. The creditor can guess but without extra information this process doesn't really work.
Online SEPA Direct Debit B2B e-mandates
SEPA Direct Debit B2B e-mandates are a digital version of the paper mandate form that can be completed and signed electronically. This option allows businesses to create, manage, and store e-mandates securely online without the need for physical documents.
In Europe there is only one player allowing it on cross border level (Twikey). In the Netherlands there are a couple of players adhering to the local NL-NL flavor.
In Europe the list of banks accepting electronic B2B e-mandates is very limited: only BNP Paribas Fortis, ING (BE and NL), KBC, Belfius, CBC, Bank Van Breda, Crelan, VDK, ABN-Amro & Rabobank can offer electronic B2B e-mandates.
Here's how to set up an online SEPA Direct Debit B2B e-mandate:
- Choose an e-mandate provider: You'll need to choose an e-mandate provider that is authorized to offer this service. There are several providers available, so do your research to find one that meets your business needs. (Eg. which countries do you want to cover).
- Customize your e-mandate: Your selected e-mandate provider will provide you with a template that you can customize with your business details and branding. You'll need to enter the name and address of the debtor and creditor, along with bank account details and payment amounts.
- Send the e-mandate for signature: Once you've customized your e-mandate, you can send it to the debtor for signature. They will receive an email with a link to the e-mandate, and they can sign it electronically using their computer or mobile device (or the customer can sign it in a portal or a website).
- Signing by the customer: The e-mandate is being signed by the customer. The e-mandate provider will verify the signature to ensure it's authentic. They'll also store the e-mandate securely on their platform.
- The e-Mandate provider will arrange the communication with the bank for a correct verification and registration.
- Once it is approved one can start using the e-mandates: with the e-mandate signed and verified, you can start using it to make SEPA Direct Debit B2B payments.
Make sure to work with an authorized provider and ensure that your e-mandates meet all the necessary requirements.
Paper SEPA B2B Mandates
A paper SEPA Direct Debit B2B mandate is a physical document that contains all the necessary information required to set up a direct debit, including the name and address of the debtor (the party that will be paying the direct debit), the creditor (the party that will be receiving the payment), and the relevant bank account details.
Here are the steps to set up a paper SEPA Direct Debit B2B mandate:
- Obtain the mandate form: you can obtain a paper mandate form example from your bank or download it from their website. Make sure to get the correct form, as there are different mandate forms for different types of SEPA Direct Debit transactions. (CORE and B2B).
- Fill out the mandate form: fill out the mandate form with all the necessary information, including the name and address of the debtor and the bank account details.
- Signing the mandate form: once the mandate form is filled out, it must be signed by the debtor on paper.
- Debtor needs to go to the bank: when a paper SEPA Direct Debit B2B mandate is filled in, the debtor needs to hand it over to the bank. In most cases this is a physical process.
- Wait for approval: after submitting the mandate form, your bank will review it to ensure that all the information is correct and complete. Once the form is approved, the direct debit will be set up and you can begin using it to make collections.The debtor should inform the creditor that he has done the action.
- Fingers crossed & test: when the creditor has been informed about the registration, he should do a first transaction as soon as possible to see if this has been really done.
It's important to note that SEPA Direct Debit B2B mandates are subject to specific rules and regulations, so make sure to familiarize yourself with these requirements before submitting the form. Also, keep the original signed mandate form in a secure location as it may be required for reference in the future.
What can go wrong with a paper B2B mandate.
We need to disappoint you but a lot can go wrong with a paper B2B mandate. These are the most common errors:
- The Debtor has followed a wrong procedure.
- The Debtor has never gone to the bank.
- The bank employee doesn't know anything about B2B direct debits and claims that his intervention is not needed anymore which is only true for CORE direct debits.
- The bank employee or the debtor has made errors in typing in the mandate reference number. Eg. Mixing a 0 and O 😉
- The Debtor has given up as he doesn't find an bank office anymore.
We encountered cases where a debtor took 8 months & 8 visits to the bank to get his mandate successfully registered. On top of this the CO2 footprint of this manual process is still huge.
Twikey made it its mission to convince all European banks to work with us. They can join the Twikey ecosystem for free. If you are a bank and not connected to Twikey, please contact us.
Legal signatures for SEPA direct debit B2B e-Mandates
For SEPA Direct Debit B2B e-mandates, the electronic signature must meet the requirements set out in the European eIDAS Regulation and the local legislation, which defines the legal framework for electronic signatures in the European Union. Finally also the bank must accept the type of electronic signature.
There are three types of electronic signatures:
- Simple Electronic Signature (SES): An SES is any electronic signature that is not advanced or qualified. This could be a scanned image of a handwritten signature, a typed name or a tick box.
- Advanced Electronic Signature (AES): An AES is an electronic signature that meets specific technical requirements and is uniquely linked to the signatory. It must also be capable of identifying any subsequent changes made to the signed document.
- Qualified Electronic Signature (QES): A QES is an advanced electronic signature that is created using a qualified digital certificate, issued by a trusted service provider. It offers the highest level of assurance and legal validity.
For SEPA Direct Debit B2B e-mandates, an AES or QES is required for the debtor's signature. The e-mandate provider should provide the necessary tools to create and verify electronic signatures. These signatures must be securely stored and kept for a minimum of 10 years after the last payment transaction has been made.
It's important to ensure that the electronic signature method used meets the legal requirements to ensure that the e-mandate is legally valid and enforceable. On top of that bank the bank needs to accept it. This is typically something Twikey has agreed upon with the banks.
Netherlands: using the eMachtiging protocol to sign Sepa Direct Debits
In the Netherlands there is a specific naming used for the official E-mandate protocol. It is called "eMachtiging" or sometimes also "Digitaal incassomachtigen". This is a Dutch term that refers to a digital direct debit authorization.
The process of setting up an eMachtiging involves the following steps:
- The company or organization requesting a mandate sends the customer a request to set up a digital direct debit authorization.
- The customer logs into their online banking account and authorizes the mandate by simply logging into the ebanking app and confirming the mandate.
- Confirmation: there is an immediate confirmation from the bank.
It's important to note that the customer has the right to cancel or modify, alter the maximum limit of the digital eMachtiging at any time.
Only negative point: for B2B only 3 banks in the Netherlands accept this flow: ABN-Armo, ING and Rabobank. For CORE mandates there are more banks: Regiobank, SNS Bank, ASN, Triodos bank. For the other banks other alternatives must be followed.
Belgium: use Itsme to sign e-mandate for sepa direct debit
It is possible to use the itsme app to sign e-mandates for SEPA Direct Debit transactions. The itsme app is a digital identity service that allows users to securely authenticate their identity and sign documents using a mobile device.
To sign an e-mandate for SEPA Direct Debit using itsme, the debtor must first download and register for the itsme app. They will need to verify their identity using their Belgian eID, their bank card, or their mobile phone. Once registered, they can use the app to sign e-mandates for SEPA Direct Debit transactions with participating creditors.
When the creditor sends the e-mandate to the debtor, the debtor will receive a notification in the itsme app. They can then open the notification and use the app to securely sign the e-mandate using their itsme credentials. The signed e-mandate is then sent back to the creditor via the e-mandate provider's platform for processing. Twikey is the first player and marketleader in Belgium supporting this flavor.
Use e-ID to sign e-mandate for sepa direct debit
It is possible to use eID to sign e-mandates for SEPA Direct Debit transactions. An eID, or electronic identification, is a secure digital credential that enables users to authenticate their identity online.
To sign an e-mandate for SEPA Direct Debit using eID, the debtor must first have a valid eID issued by their national government or other authorized provider. They can then use the eID to sign the e-mandate electronically using a secure and approved electronic signature method that meets eIDAS requirements.
When the creditor sends the e-mandate to the debtor, the debtor will receive a notification via the e-mandate provider's platform. They can then use their eID credentials to securely sign the e-mandate. The signed e-mandate is then sent back to the creditor via the e-mandate provider's platform for processing.
It's important to note that the use of eID for e-mandate signing may be subject to specific regulations and requirements, depending on the country. Therefore, it's recommended to consult with the relevant authorities or financial institution to ensure compliance with all necessary regulations and requirements
Managing SEPA mandates on a day-to-day basis involves several key tasks and responsibilities, including:
Collecting and storing mandates: The creditor must collect and securely store all SEPA mandates received from debtors. This includes both paper and electronic mandates.
Verifying mandates: The creditor must verify that each mandate contains all required information and is signed by the debtor using an approved electronic signature method or a wet signature (when on paper).
Updating mandates: The creditor must update the SEPA mandate database whenever there is a change in the mandate details, such as an IBAN account. Following the SEPA rulebooks, an extra confirmation message containing the details of this change to the end-user is required.
Updating mandates when a bank moving service reports a change: Some countries have a bankmoving service. This info must be translated in mandates.
Cancelling mandates: The creditor must cancel any mandates that are no longer valid (after 36 months non-usage) or when the end-customer asks this. This is not necessarily obliged when stopping a contract but it is a good practise.
Initiating direct debit transactions: The creditor must use valid SEPA mandates to initiate direct debit transactions with the debtor's bank. This also includes correct interpretation of the feedback of the bank.
Resolving disputes: The creditor must handle any disputes or errors related to SEPA direct debit transactions, such as incorrect payment amounts or unauthorized transactions. This may involve communicating with the debtor's bank, the debtor, or other parties involved in the transaction.
It's important for the creditor to have clear processes and procedures in place for managing SEPA mandates on a day-to-day basis to ensure compliance with regulatory requirements and minimize the risk of errors or disputes. Using a reliable and secure SEPA mandate management software can also help streamline these tasks and reduce the risk of errors.
Update IBAN SEPA Direct Debit Mandate
If you need to update the IBAN associated with a SEPA Direct Debit mandate, you will need to follow certain steps to ensure that the update is done correctly and legally. Here's what you should do:
Be certain you have the debtor's consent: Before updating the IBAN associated with a SEPA Direct Debit mandate, you must be certain to have the customer consent to do so. This can be via mail, a recorded phone call or another tool that can proof this consent. There is no signature required. One exception: if the bank informs you about the switch in case of a bankmoving service, this consent is not necessary.
Update the mandate information: Once you have obtained the debtor's request, you should update the mandate information with the new IBAN. This may involve using a SEPA mandate management software to make the update.
Notify the debtor's bank: Once the mandate information has been updated, you must notify the debtor's bank of the change in the IBAN associated with the mandate. This is typically done using a standardized message format, such as a pain.008 message with an amendment message. It is also possible to delegate this more complex flow to a SEPA mandate management software.
Notify the debtor: Inform or confirm to the debtor the change. This can be done via mail, via a portal or via other usual communication streams with the end-customer.
For a B2B SEPA Direct Debit, the recommendation is to sign a completely new mandate with a new mandate reference. Not all banks are in the possibility to update the Mandate information internally.
Cancel SEPA DIRECT debit Mandate as merchant
If you need to cancel a SEPA Direct Debit mandate, you will need to follow certain steps to ensure that the cancellation is done correctly and legally. Here's what you should do:
Notify the debtor: When cancelling a SEPA Direct Debit mandate, you can notify the debtor of the cancellation. This may involve sending a notice by mail or email. The SEPA rulebooks don't mention this as required but this is more customer friendly.
Keep records: It's important to keep accurate records of the cancelled SEPA Direct Debit mandate, including the date of cancellation, the reason for cancellation, and any relevant correspondence with the debtor or their bank. You'll need to store a cancelled mandate like you store a contract after last usage. So usually 10 years.
It's important to note that cancelling a SEPA Direct Debit mandate by the creditor or by the debtor does not release the debtor from any outstanding payment obligations under the mandate, so you may need to pursue alternative means of collecting the outstanding payments if necessary.
Update sepa direct debit mandate in accounting software
If you need to update a SEPA Direct Debit mandate in your accounting software, the exact steps may vary depending on the specific software you are using. However, here are some general steps you can follow:
Open the relevant customer or supplier account: To update a SEPA Direct Debit mandate, you will need to access the customer or supplier account associated with the mandate.
Edit the mandate information: Once you have opened the relevant account, you should be able to access the mandate information. Depending on your software, this may involve clicking on a specific tab or menu item. From there, you can update the mandate information, including the debtor's name, address, and IBAN.
Verify the update: After saving the changes, you should verify that the update has been processed correctly by sending a new direct debit instruction to the bank.
Sometimes we see that some tools still use an old way of communicating a first Sepa direct debit instruction via the FRST instruction. This complex rule has been eliminated November 2016. Please check this blog for the full description
When two companies merge, it may be necessary to merge their SEPA Direct Debit mandates as well. Here are some steps to follow when merging SEPA Direct Debit mandates on acquisition:
Review existing mandates: First, review the existing SEPA Direct Debit mandates held by both companies. Determine if there are any duplicates, or if there are any differences in mandate information such as the debtor's name or IBAN.
Notify customers: Notify customers of both companies about the merger and the potential changes to their SEPA Direct Debit mandates. Inform them of any new mandates that may need to be set up, and provide any necessary instructions or forms.
Obtain new mandates if necessary: If any new mandates need to be set up due to the merger, obtain the necessary authorization from the customers. This may involve sending new mandate forms for them to sign, or obtaining verbal or electronic authorization. Signing again and registration at bank side is a must with B2B mandates. Contact Twikey for exceptions that might exist but do this before starting with the merger procedure. For CORE direct debit mandates there are some ways to solve it.
Merge existing mandates: If there are duplicate mandates or differences in mandate information, merge the existing mandates into a single mandate with the correct information. Inform the debtor of any changes.
Verify and test: After merging the SEPA Direct Debit mandates, verify that the updated mandates are functioning correctly. The only way to test this is via real transactions.
It's important to keep accurate records of all SEPA Direct Debit mandates and any changes or updates made during the merger process. This will help ensure compliance with applicable regulations and requirements, and provide a clear audit trail for future reference.
Twikey has extensive experience in doing these migration projects.