15The SEPA Core Direct Debit is a popular payment method. In contrast to a credit transfer, the creditor initiates the payment with the SEPA Direct Debit. It is therefore a so-called pull payment. A SEPA basic direct debit transaction takes place in several steps:
Issuing a SEPA Direct Debit Mandate
If the merchant offers the SEPA Core Direct Debit payment method and the customer wants to pay for their purchases in this way, the customer issues the merchant with a SEPA Direct Debit Mandate. In addition to authorizing the merchant to collect the direct debit, this mandate also includes instructions to the customer’s bank to redeem the direct debit. The SEPA Direct Debit Mandate is not necessarily signed by the customer. However, in the case of SEPA Direct Debit Mandates issued online, for example, there is a risk that a customer, with the objection that they did not issue the SEPA Direct Debit Mandate, triggers a return debit via the customer bank and the merchant cannot prove that the mandate was issued. The merchant bears this risk for 13 months.
Pre-notification of SEPA Core Direct Debit
In order to give the customer time to ensure that there are sufficient funds in their account, the merchant must inform the customer in advance of the account debit. The merchant will inform the customer of the debit date and the amount to be collected, stating the creditor ID and the mandate reference. This notification must be made 14 days before the debit date, unless otherwise agreed – for example in the merchant’s General Terms and Conditions.
Direct debit submission and transaction execution
The merchant submits the direct debit to the merchant’s bank by transmitting the direct debit data to it. The SEPA Direct Debit Mandate issued by the customer remains with the merchant. The merchant bank then submits the direct debit to the customer bank for settlement. All payment transactions are effected on the due date. This means that the customer bank transfers the amount to the merchant bank and debits the customer’s account accordingly. The merchant bank then credits the amount to the payee.
Possibility of chargeback within 8 weeks
Even if the customer has effectively issued a SEPA Direct Debit Mandate to the merchant, the customer may, within a period of eight weeks from the date of the debit entry on his account, demand reimbursement of the debited direct debit amount from the customer’s bank without stating reasons. The customer bank will then restore the customer’s account to its original balance and return the direct debit.
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