SEPA direct debits
The rulebooks by the European Payments Council serve as basis for processing SEPA direct debits (SDD) in the private and business customer sectors.
SDD was introduced throughout Europe in November 2009. Financial institutions in the EU are required to participate in the scheme. The national procedures – in Switzerland LSV+ and BDD from the banks and Debit Direct from the PostFinance – will remain in existence for the time being.
The main advantages of SDD
- Standard direct debits in 36 countries throughout Europe
- Internationally standardized processes, terms and formalities
- Separation of funds from the flow of information (prenotification, account is debited on the due date)
- Continuous mandate reference is also possible for refunds
The two SDD schemes
The basis for the processing of SEPA-conforming direct debits for the private customer sector (Business to Customer or B2C) is the "SEPA Core Direct Debit Scheme Rulebook". It defines the internationally applicable processes, terms and formalities (e.g. mandate administration, one-time and recurring debits) and among other things stipulates that:
- debtors must be granted the right to object;
- the prenotification of an upcoming debiting of the debtor by the creditor is required;
- clearly defined chargeback processes (R-transactions: returns, revocations, reversals, refunds, rejects) exist, and;
- the transactions are processed using standard formats (ISO 20022) and data content (IBAN and BIC).
The SEPA Business-to-Business Direct Debit scheme is used for business customers as creditors and debtors and essentially differs from the SEPA Core Direct Debit scheme in that:
- the debtor must be a bank or a business;
- the debtors need not be granted the right to object;
- no refund is possible once the debtor’s account has been debited, and;
- shorter terms can be used.
SEPA direct debits for financial institutions in Switzerland and Liechtenstein
Financial institutions in Switzerland and Liechtenstein are able to process SDD on schedule since November 2009. Participation in the SDD scheme requires, among other things, new contracts, new creditor identification numbers (Creditor Identifier) and new direct debit authorizations (mandates). Mandates are prerequisite to be able to conduct debiting of the debtor. The debtor thereby authorizes the creditor to directly debit his/her account at the financial institution provided.