SEPA Direct Debit

ING currently offers SEPA Direct Debit initiation in 13 countries in the SEPA area: Austria, Belgium, Czech Republic, France, Germany, Hungary, Italy, Luxembourg, the Netherlands, Portugal, Slovakia, Spain and Switzerland. SEPA Direct Debit enables businesses to collect money in the SEPA area from a single country and a single account. SEPA Direct Debit is a cost-effective and efficient product that allows the creditor to easily manage and predict his or her liquidity position. There are two different types of SEPA Direct Debit schemes available: the SEPA Direct Debit Core for collections from consumers and businesses, and Business-to-Business (B2B) for collections solely from businesses. The initiation XML format for SEPA Direct Debit is a standardised format, that can differ between countries and banks.

• Product prerequisites for creditors
• SEPA Direct Debit mandate templates
• ‘R’ messages
• Participating banks
• TARGET closing days
• Cut-off times

SEPA Direct Debit Core can be used for consumers and organisations. The SEPA Direct Debit Core can be one-off or a recurrent collection. An eight week period of unconditional refund for the debtor applies.

The SEPA Direct Debit B2B can only be used by and between businesses. There is no right of refund for the debtor after the SEPA Direct Debit B2B is processed which provides considerably more certainty for the creditor. To minimise the risk on the debtor side, the debtor is required to make a registration (consent) of the mandate at the debtor’s bank. Because B2B is an optional scheme, not all banks, and hence not all businesses, can be reached. To ensure collection from your customers, ING offers both a Core and B2B contract to all ING customers.

The initiation XML format for SEPA Direct Debit is a standardised format (EPC guidelines: XML ISO 20022, pain.008.001.02). The formats of XML initiation files for SEPA Direct Debit can differ between countries and banks. Each country has his own specific guideline for SEPA Direct Debit Core and B2B initiation formats. For more information, see the initiation formats or get in touch with our local office.

In general, the following prerequisites apply for creditors using SEPA Direct Debit products:

• A signed SEPA Direct Debit contract between the creditor and ING. Contact your local office for the country-specific details of a SEPA Direct Debit contract.
• As a creditor, you need to obtain a creditor identifier (id). This identification is a unique combination of characters and must be stable in time to enable the debtor to return to the creditor for any (unauthorised) transactions, complaints, etc. The composition and application process of the creditor id differs per country.
• There must be an agreement between debtor and creditor. This is called a SEPA mandate and is issued by the creditor. The SEPA mandate includes specific compulsory SEPA content.

As a creditor, you need to inform your debtors about forthcoming direct debits to their account through a pre-notification at least 14 days in advance. Debtors and creditors may agree to other time limits if they wish. For example, with a recurrent direct debit, parties can agree to only send a pre-notification once a year.

There are no rules concerning the format of the pre-notification, so the debtor and the creditor can agree on how it will be sent. For example, it could be a message on the invoice in which states the collection date.

Because the debtor must also be informed of the creditor id and mandate reference before the first direct debit, we advise you to mention these in the pre-notification.

There are different templates available for mandates SEPA Direct Debit Core, Cor1 and B2B per country.

An important aspect of the SEPA Direct Debit is the processing of failed transactions. To address this, R-messages are used in the account reporting (camt.05x, MT94x) to indicate why a transaction could not be processed. An R-message consists of a Reason Code indicating the ‘why’ and Reason type illustrating the type of R- message. The different possible 'R' messages are: (pre-settlement) request for cancellation, request for revocation, refusal, reject, (after settlement) refund, reversal and return. For a detailed explanation, you can read the SEPA Direct Debit reporting functionalities.

If your debtor has insufficient funds, you will receive an R-message that notifies you that the debit transaction was not processed successfully, subsequently you have to re-submit the transaction.

Please note that in most cases this concerns the R-message: AM04 (the Netherlands, France, Ireland, Italy, Portugal and Spain). But in Belgium, Germany and Austria ING reports MS03 due to regulatory reasons.

Banks that offered domestic direct debits on the debtor side prior to the introduction of SEPA Direct Debits are obliged to be reachable in the SEPA Direct Debit scheme. It is important therefore to verify which banks are reachable for SEPA Direct Debit Core and SEPA Direct Debit B2B.

The SEPA Direct Debit B2B scheme is optional and banks can decide whether to offer this service or not on the debtor side. Each bank can choose whether to offer services to creditors.

ING offers the SEPA Direct Debit B2B. A list of other banks that currently offer direct debits on the debtor side can be found at the site of EBA Clearing.

TARGET2 is open for the processing of payments every working day from 07:00 to 18:00 CET. The system is closed on the following days:

• 1 January (New Year's Day)
• Good Friday
• Easter Monday
• 1 May (Labour Day)
• 25 December (Christmas Day)
• 26 December

• Cut-off times 
• SEPA Direct Debit timelines
• Mandate amendments
• Creditor identifier
• Learn more about SEPA