Direct debit business

Pursuant to the legal definition contained in Section 1 para. 1 sentence 2 no. 3a) of the German Payment Services Supervision Act (ZAG), direct debit business refers to the execution of payment transactions including the transfer of funds to a payment account with the payment service provider of the user or with another payment service provider by executing direct debits including one-off direct debits.

According to BaFin’s understanding, direct debit business is only carried out by those who participate in the relevant payment system (e.g. the set of rules regarding SEPA direct debits of the European Payments Council). These are primarily banks and savings banks. In accordance with BaFin’s understanding, if somebody only makes direct debits available for collection by third parties at a bank or savings bank, they do not carry out direct debit business, but may engage in other payment services.

Direct debit business is a payment service. Anyone who wants to carry out direct debit business at a professional level requires a licence for this (in Germany this is a licence from BaFin).