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The introduction of SEPA has a number of implications for businesses and non-profit organisations who currently raise direct debits on their customers. This entity is known as "The Creditor".
It is the responsibility of the creditor to retain and manage the mandate forms signed by their customers (“The Debtor”). If the debtor queries the validity of a direct debit mandate and the creditor cannot produce the mandate then the debtor can request repayment of up to 13 months of direct debit transactions. Under SEPA rules the creditor is required to hold and store the paper mandate for the life of the direct debit and for 13 months after the mandate has expired or cancelled. Our application allows you to link an electronic copy of each paper mandate for easy reference.
While the previous EMTS direct debit mandates contain only the NSC and Account number, these mandates are deemed acceptable for SEPA direct debits. You will however require the BIC and IBAN from the customers. You will not need new mandates to be signed for these customers. However all new/future mandates must comply with the new SEPA format mandate. You are legally required to include specific text on the mandate form signed by the customer. Your bank may require you to submit sample SEPA mandate forms for verification prior to going live with SEPA.
The software producing the direct debit file must accurately track payments relating to each mandate, from first payment through to final presentation. Each transaction relating to an individual mandate must contain a unique mandate reference. The debtor's bank must return unpaid items within 5 working days. These returns will be contained in files which will be made available by your bank (usually through the electronic banking system).
The debtor can request refund or amendment of any direct debit transaction for up to 8 weeks following the transaction date. This refund must be made without question. The creditor will no doubt engage with the debtor to identify the reason for the refund and discuss the transaction, but they are obliged to refund the monies.
The creditor is required to pre-notify the debtor of the debit transaction at least 14 calendar days prior to the due date (unless a shorter time has been agreed between the two parties).
Originally in the SEPA environment, the direct debit file must be submitted with a “lead time” of at least 3 working days prior to the due date for Recurring and Last payments and at least 6 working days for First and Once-off payments. This has since been reduced to at least 2 working days for all payments. Some banks allow you submit transactions 1 day prior to processing but the cut-off time is earlier in the day (usually approximately 11:00am). If you wish to avail of this shorter lead time please contact your bank for details of their cut-off times.
You will need to apply to your bank to become a SEPA creditor. You will be required to complete a SEPA application form. You may be required to supply a copy of your SEPA Direct Debit Mandate with the correct legal wording. We can help by providing a template form which you can customise with your logo and business name. When approved, you will be issued with a "Creditor ID" (sometimes called an "Originator Number") which must be included in all SEPA files.
If there are no transactions on a mandate for 36 months then the mandate will be deemed to have expired. No further transactions should be processed on this mandate.
The debtor is entitled to request a refund of "unauthorised transactions" up to 13 months after the debit date. A transaction is unauthorised if:
Our SEPA Direct Debits system (which is fully compliant with all the SEPA requirements in the previous paragraphs), manages the full lifetime of a direct debit mandate from the first to the final presentation, clearly showing which transactions are First / One-off payments or Last payment. It verifies that when you submit the files you have sufficient time for processing on the appropriate date (including allowing for ECB public holidays if you maintain the list of the public holidays on the system). It also allows you maintain an electronic scan of the mandate forms and link them to the customer details.
Our SEPA Direct Debits system allows you collect either variable amounts or regular payment amounts (eg. club subscription). It is designed in conjunction with our customers to be easy to use, robust, efficient and functionally rich. If you would like further information or a demonstration on this application please contact us.
The SEPA initiative by the EU commenced in 2002 with the aim of allowing seamless transaction flow between banks within the Single Euro Payments Area ... More
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