SEPA DIRECT DEBIT
CONTENTS
INTRODUCTION
3
THE EUROPEAN DIRECT DEBIT SCHEME (SEPA DIRECT DEBIT)
4
THE EUROPEAN DIRECT DEBIT MANDATE
6
« CORE » & « B2B » : TWO DIFFERENT EUROPEAN
7
DIRECT DEBIT SCHEMES
WHAT CAN WE DO FOR YOU...
10
SUPPORT SERVICES
12
The European direct debit scheme (SEPA direct debit) is a payment tool developed within the SEPA framework (1).
As of 1 February 2014 the European direct debit replaced every national scheme for direct debit in euros(2).
SEPA aims to standardise payment transactions. It allows users to execute their Euro transactions throughout the SEPA zone in the same way as they would in their own country, based on the same user-friendly and secure methods and in the same time frame.
(1) The Single Euro Payment Area (SEPA) is an initiative of the European Commission with support from the European Central Bank (ECB). The SEPA comprises the member states of the European Union (Austria, Belgium, Bulgaria, Cyprus, Croatie, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, the United Kingdom and Iceland) + Liechtenstein, Monaco, Norway and Switzerland.
The European direct debit scheme makes it possible to execute debt transactions in the 28 member states of the European Union, the three additional members of the European Economic Area, Switzerland and Monaco. It can be used for both recurring or one-off collections. The transactions must be in Euro and no limits have been set with respect to amounts.
PRACTICAL APPLICATION
The European direct debit scheme is based on a model involving four parties: the creditor (beneficiary), the debtor (payer), the creditor’s bank and the debtor’s bank. These four parties are linked via a direct debit mandate.
Under the European system, the mandate is managed by the creditor: it is signed by the debtor in favour of the creditor and returned directly to the creditor. The debtor bank does not intervene.
THE EUROPEAN DIRECT
DEBIT SCHEME
MAIN ADVANTAGES FOR CREDITORS
• It is a user-friendly and cheap debt collection method.
• The transactions are executed in accordance with a predetermined timeframe, so that you know exactly when you will be paid, which will facilitate liquid asset management. • The debit entries on the debtors’ accounts and credit entries on the creditor’s account will be executed on the same day (same day value). The collections can be made by a single bank, irrespective of the SEPA country in which the debtors are based.
• This will facilitate and speed up reconciliation.
• The option to request unconditional repayment will encourage your debtors to accept a direct debit arrangement.
• Your payment processes will be standardised and the costs associated with back-office investigations will be reduced.
HOW DOES IT WORK?
1. The creditor signs a European direct debit contract with his/ her bank.
2. The debtor supplies the creditor with a mandate in which she/he authorises the creditor to collect debts from a specific account.
3. In order to collect a payment, the creditor must notify the debtor at least 14 calendar days before the day of collection, unless another time period has been agreed. This notification must stipulate the date and amount of the payment and can be sent by invoice or another comparable document. In the event of recurrent transactions, the creditor can submit a payment plan that stipulates different collection dates and agreed amounts. Individual notifications will be required for any significant changes (e.g. new amount, new collection date,…).
4. Before collection, the creditor must send the data – including details of the transaction and electronic information regarding the mandates of the relevant debtors- to his/her bank.
5. The creditor’s bank will submit the request for collection to the debtor’s bank.
6. The debtor’s bank will debit the amount directly from the debtor’s account.
Creditors who would like to collect payments via direct debit from their clients, have to ask the latter to complete, sign and return a European direct debit mandate. An example of this type of mandate is shown below.
TYPICAL EXAMPLE OF
A EUROPEAN DIRECT DEBIT MANDATE:
THE MANDATE MUST
INCLUDE THE FOLLOWING
INFORMATION:
• Creditor’s data • Debtor’s data
• Debtor’s BIC and IBAN numbers • Debtor’s signature and date • Mandate reference number (defined by the creditor and limited to 35 characters) • Type of payment (single
or recurrent)
• Identification of underlying contract
E-MANDATE
Creditors and debtors have the opportunity to set up electronic mandates. In practice, the E-mandate is based on an exchange and agreement notified by the debtor on the creditor’s website.
The electronic mandate gives the creditor optimum security that the mandate is valid.
THE EUROPEAN
DIRECT DEBIT
MANDATE
CREDITOR plc TVA GB0123456789 Supplier street 31 Tel 32 2 287 45 21 London XY81AA
ID UK12CRE01258639405
EUROPEAN DIRECT DEBIT MANDATE - SCHEME
Mandate reference number (to be completed by creditor) : ...
for a RECURRENT/ONE-OFF COLLECTION
UNDERSIGNED Surname
First name
Street name and number
Post code and location
IBAN
BIC
CONTRACT 010101 CLIENT 123456
Date (day/month/year) Signature . . / . . / . . . .
Location ...
By signing this mandate you (A) authorise CREDITOR NV to send instructions to your bank to debit your account and (B) authorise your bank to debit your account in accordance with instructions received from CREDITOR NV.
In order to provide maximum flexibility for creditors, the European direct debit system comprises two different schemes with individual standards, rules and operating modes.
The basic or ‘core’ scheme is intended for creditors whose debtors include both consumers and professionals (2). The ‘B2B’ (Business-to-Business) scheme is solely intended for creditors with professional debtors.
THE ‘CORE’ SCHEME
• Both single and recurrent collections are feasible.
• The creditor must send an initial request for collection (including one-off collections) to the bank at least five days before the due date. For recurrent direct debits only two full days are required from the second collection onwards.
• Debtors or their bank can refuse payment before the due date. • Debtors are entitled to contest the transaction and demand
unconditional repayment of an approved transaction up to eight weeks after the debit date.
• In the event of a non-approved transaction (e.g. when the debtor has not signed a valid mandate) or an incorrect transaction, repayment can be requested up to 13 months
after the due date.
• Debtors are entitled to ask the creditor for a cancellation of the mandate at any time.
• Non-executed payments originating from the debtor’s bank must be forwarded at the latest five days after the collection date. • A European direct debit mandate automatically ends if no direct
debit is offered under the mandate for a 36-month period.
THE ‘BUSINESS-TO-BUSINESS’ SCHEME
The ‘B2B’ scheme is intended for direct debit transactions between professionals. This scheme is optional and is not necessarily offered by every bank. BNP Paribas Fortis offers ‘B2B’ to both creditors and their debtors.
The differences between the ‘B2B’ and the ‘core’ scheme are as follows:
• Debtors are not entitled to the repayment of an approved transaction.
• The period for the submission of a collection file has been cut to one day.
• Information regarding unpaid instructions from the debtor’s bank will be notified a maximum of D+2 after payment date.
• The debtor's bank must verify whether the 'B2B' mandate was authorised by a professional debtor before the first collection. This is why 'B2B' debtors must confirm their mandate with their bank before the first collection can take place.
« CORE » & « B2B » :
TWO DIFFERENT EUROPEAN
DIRECT DEBIT SCHEMES
SEPA STANDARDS
Similar to other European transfers, European direct debit transactions are executed in accordance with SEPA standards, namely:
• Obligatory use of the International Bank Account Number (IBAN) and Bank Identifier Code (BIC) as a means of identifying accounts and banks. • Application of the UNIFI (ISO 20022)
XML standard to issue instructions for collection by the bank (See http://www. europeanpaymentscouncil.eu / SEPA customer /A shortcut to the SEPA Data Format).
• Availability of 140 (4x35) characters for the message.
COMPARATIVE TIMELINE BETWEEN
CORE SCHEME AND B2B
SDD CORE
D+13m Refusal of non-approved collections D+13m Refusal of non-approved collections D+5 Refusal by the bank D-14 Payment pre-advice D-5 8:00 One-off collection - Initial collection D-2 8:00 Recurrent collections D+8w Unconditional refusal D+8w Unconditional refusal D Collection date = payment dateDOM80
D-1 12 :00 D-5 Payment pre-advice D+1 Payment creditors D Pivot date = paiement date D+13m Refusal of non-approved collectionsSDD B2B
D-14 Payment pre-advice D-1 9:00 Oneoff collection Initial collection -Recurrent collections D+2 Refusal by the bank D Collection date = payment dateMAIN DIFFERENCES BETWEEN DOM80 AND EUROPEAN DIRECT DEBITS (CORE)
DOM80 CORE
USE Locale Cross-border and local
VERSIONS Recurring direct debits only Recurring and one-off direct debits
CREDITOR IDENTIFICATION Company number or specific reference
allocated by the BNB
Reference given by the creditor's bank based on the company number or specific number MANDATE MANAGEMENT
AND ARCHIVING Debitor's bank Creditor
MANDATE REFERENCE Issued by the debtor's bank Issued by the creditor
PAYMENT EXECUTION DATE One day Same day
SENDING FORMAT OF
BANK COLLECTIONS CIRI XML
SET UP EUROPEAN DIRECT DEBITS
BNP Paribas Fortis helps you to set up European direct debits efficiently and smoothly, with personal guidance, detailed checklists and support services. Should you still have mandates in the old national direct debit scheme, BNP Paribas Fortis can also help you in your switch.
A few important pointers can be found below:
It is very easy to obtain a complete picture of all your existing mandates (including IBAN and BIC) through BNP Paribas Fortis. The Belgian banks keep the data for all existing DOM80 mandates and regularly provide these to the National Bank of Belgium. Creditors who wish to switch can request the bank to provide an electronic copy of this information.
In order to migrate to the ‘core’ plan, there is no need to ask your debtors to sign any new mandates. In other words, the direct debit mandates remain valid in this plan and stay with the debtor’s bank. However, if you want to switch to the ‘B2B’ plan, the existing mandates cannot be transferred and new mandates are necessary.
SUPPORT SERVICES
The European direct debit is a very effective instrument which ensures timely payment of your debt collections.
BNP Paribas Fortis offers both European direct debit schemes, that is to say the “core” and “B2B” version.
BNP Paribas Fortis puts at your disposal several systems to manage mandates and/or send you SDD collections to our bank. A full and in-depth report of all transactions, in CODA format will allow you to automate your management processes (reconciliation, bad debt management, etc.).
ISABEL 6
XML files with collection requests can be electronically retrieved and forwarded in Isabel 6.
For more information, please go to the Isabel 6 website at
http ://www.isabel.eu
€ASY COLLECT
€asy Collect allows you to manage mandates as well as migrate your DOM80 mandates. In addition, €asy Collect allows you to generate SEPA compliant XML collection files without significant impact on accounting packages or a need to invest in heavy in-house developments whilst keeping your existing formats.
PC BANKING BUSINESS
With PC Banking Business, you have all the tools you need to make European direct debits even simpler. High-performance management of your mandates
• With PC Banking Business, we provide you with an overview of all your existing "mandats" (inclucing IBAN and BIC of debtors). • You can create and manage new direct debit mandates
yourself, quickly and easily.
• You can classify your European direct debit mandates according to your own selection criteria.
Your collections are processed easily
• On the basis of your debtors’ fixed data, you fill in the “amount to collect” and “communication” sections then send us the collection instructions.
• If you use a specific accounting software package, then PC Banking Business allows you to import and send your collection files to BNP Paribas Fortis.
If you would like more information on the European
direct debit scheme and the way in which BNP
Paribas Fortis can help you to set up the European
direct debit scheme, please do not hesitate to get in
touch with your usual bank contact person.
SEPA
GLOSSARY
BIC Business Identifier Codes
BIC codes identify banks at an international level.
CIRI CIRI = Inter-bank IT Research Centre
Format currently used in Belgium to exchange payment files.
CODA A CODA (structured bank statement) is a structured file with details of
all transactions on a specific day for a current account, savings account or time deposit. It is the coded electronic equivalent of a paper statement.
EPC European Payments Council.
IBAN International Bank Account Number
or an international bank account identification code.
ISO International Organisation for Standardisation
SDD Sepa Direct Debit = European direct debit scheme
SWIFT Society for Worldwide Interbank Financial Communication SWIFT is an inter-bank network that links banks on a global scale.
UNIFI Universal Financial Industry Message Scheme.
UNIFI is an ISO20022 standard. The EPC has decreed that only the UNIFI format would enable the transmission of SEPA instructions and guarantee the reconstruction of the complete data package transmitted by the principal.
XML Extensible Markup Language
XML is an increasingly popular IT language. It is the recommended standard for exchanges via the Internet. The UNIFI standard uses the XML syntax.
Printed on 100 % recycled paper
CORPORATE & PUBLIC BANK, BELGIUM BNP Paribas Fortis SA/NV,
Montagne du Parc 3, B-1000 Brussels,
RPM/RPR Brussels, VAT BE0403.199.702, Intermediary authorized under number 25.879A by the FSMA
This brochure was created for informative purposes by BNP Paribas Fortis SA/NV. The information contained in this brochure is subject to change. While BNP Paribas Fortis SA/NV takes great care to ensure that the information in this brochure is correct, it may not be held liable for possible errors or omissions, or the direct or indirect damage that might result from this.
