A SEPA Direct Debit mandate, also referred to as a SEPA mandate, is a legal document that authorizes an organization to debit funds directly from an individual’s or company’s bank account. This permission must be provided either in writing or electronically and must be signed by the entity or individual accepting the payment.
The SEPA mandate includes essential information about the customer as required under the PSD2 regulations, such as the debtor’s name, address, signature, IBAN and BIC, and specifies the amount and date of the debit.
A SEPA mandate offers many benefits for businesses:
It simplifies the process of collecting and handling recurring payments.
It enables businesses to better monitor the status of their cashflow as well as incoming and outgoing payments.
It lowers all related expenses.
For customers, signing a SEPA mandate makes the recurring payment process for services like subscriptions, utility bills and telecommunications services more straightforward. It removes the necessity to manually initiate or confirm each recurring payment.
SEPA mandates are available and valid in two formats:
Paper SEPA mandates require the debtor to return the completed form, which the creditor must then scan and store both digitally and physically.
This process adds complexity
Digital mandates offer several advantages over their paper counterparts:
To ensure full validity and compliance, and to avoid potential disputes or revocation requests, a SEPA mandate must include the following information:
Beyond these requirements, the layout of the mandate is flexible (creditors are free to design it according to their preferences).
To ensure compliance, SEPA Direct Debit mandates must be retained for the duration of their validity and for a minimum of 36 months following the last collection.
It is essential that all mandated information remain accessible for verification or legal purposes as required.
Merchants must keep all signed paper mandates, including any later modifications or cancellations. These can be stored as original documents or in a digitalized format.
Merchants are responsible for (securely) storing all data related to electronic mandates.
Both merchants (creditors) and customers (debtors) have the ability to request amendments to a SEPA mandate at any time. Such amendments must be agreed by both parties. Both associated banks must be informed of any changes to ensure smooth transaction processes.
Both the customer and the merchant have the right to cancel a SEPA Direct Debit mandate at any time. Moreover, as written previously, any mandate that has been inactive for 36 months must be automatically cancelled by the merchant.
To cancel a mandate, the SDD scheme defines that the customer must contact the merchant. This will lead to a proper management of the cancellation.
Some banks disregard the SEPA scheme and enable customers to cancel a mandate through their bank. When this is done, the bank does not inform the merchant until the merchant tries to collect on this mandate. The effect for the customer and the bank is immediate (if conducted during banking hours) but this is not the proper way.
Once a mandate is cancelled, it cannot be reused. A new mandate must be established for any further direct debit payments.
SEPA Direct Debit Core has a strong customer protection built into the scheme rules. Any withdrawal can be cancelled within eight weeks of withdrawal without providing a reason. Any collected funds must be returned by the merchant.
To revoke a SEPA Direct Debit authorization, customers need to notify their bank in providing a reason for the cancellation. The bank will then inform the business and will cease to collect payments or will refund any disputed amounts.
Merchants are responsible for storing all cancellation documents. If there are still collections to be made after a cancellation, details of the cancellation must be included in the final collection.
Businesses should provide customers with an accessible and straightforward mechanism to cancel a SEPA Direct Debit. This includes clear communication about the cancellation process and making relevant information available (on websites, in contracts…).
Mandates can only be renewed or extended through written communication.
If a mandate is cancelled or expires, the company legally cannot continue collections. Therefore, companies must monitor the validity of mandates and renew them as soon as needed.
Digiteal offers a unique and highly secure solution for creating, validating and storing your SEPA mandates.
Our authorization process leverages Strong Customer Authentication (SCA) within the customer’s own banking environment. This significantly improves security and reduces the risk of fraud. Each authorization is certified by Digiteal and helps you provide verifiable proof of the mandate should the debtor or their bank require it.
By using Digiteal, you benefit from real-time updates on the processing of mandates via webhooks. Plus, any cancellations of the SEPA Direct Debit (SDD) are also communicated through webhooks. The withdrawals can be performed from any bank that supports SDD and Digiteal can settle to any bank in the SEPA zone. This gives excellent flexibility to enable SDDs throughout Europe to all merchants.
Digiteal ensures your mandate authorizations are securely stored and archived for 20 years, with the option to extend this period.
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