All you need to know about payments by direct debit / SDD mandate

Summary
How it works in your system
How do I cancel a transaction?
What are the possible statuses of a transaction
My customer says he has been debited but the transaction is not showing as successful in the dashboard
What are the error codes?
How do I refund a transaction carried out by direct debit / SDD mandate?
If you have doubts about a transaction

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How it works in your system

A SEPA Direct Debit allows you to collect payments in EUR in the 34 countries of the SEPA zone (Single Euro Payments Area), from individuals (SEPA Core Direct Debit) or from companies (SEPA B2B Direct Debit).
Benefits of payment by SEPA Direct Debit include:

  • Management of recurring payments (subscriptions, loan repayments, etc.).
  • Payment initiated by the payee (vs. bank transfer for example, which is initiated by the payer), allowing better control of your receivables & easier cash flow forecasting.
  • Simplification of the customer journey (once the payer has signed the direct debit mandate, electronically or manually, they need take no further action)
  • Improved retention rate (vs. card “rebilling” which can pose problems with expiry dates and spending limits)

Setting up a SEPA Direct Debit (Core or B2B) is quick and easy using our API, which allows the direct debit mandate to be generated & signed online, as well as processing your direct debit orders and managing outstanding payments (for more information on outstanding payments, see the If there is any doubt about a transaction section of this article).
The main features of SEPA Core and B2B (also known as business-to-business) direct debits are outlined below:

ITEM

SDD CORE

SDD B2B

Target payee

Individuals (including self-employed) or Businesses

Businesses only

Lemonway submission deadline to be credited in E+1 (E=requested settlement date/banking business day)

E-2 before 10:30 am (Paris time)

Lemonway direct debit process

• The creditor (you) issues the direct debit instruction: creation of an SDD Money-In transaction with a pending status

• The debtor's withdrawal/debit is carried out on E

• The debit amount is credited to the payment account on E+1: the initial transaction status is automatically changed from pending to successful

• In the event of an unpaid/returned direct debit: an SDD Money-Out transaction with a successful status is automatically created in the payment account receiving the original transaction.

Type of mandate

Core direct debit mandate

B2B direct debit mandate

Submission by the debtor of the signed mandate to his bank

Not required

Required

Notification of the debtor by the creditor prior to each debit

Required

Time limits for the debtor to dispute the debit

(E = direct debit processing date = debit date)

From E to E + 8 weeks: the debtor can object to his bank without any supporting documents and the debtor can be immediately re-credited/the creditor can be immediately debited on receipt of the "return"/unpaid amount by Lemonway.

From E + 8 weeks to E + 13 months: dispute by the debtor is possible, although re-crediting is not automatic and subject to presentation by the creditor of evidence of the signed mandate / delivery of the product etc.

From E to E + 13 months: dispute by the debtor is possible, although re-crediting is not automatic and subject to presentation by the creditor of evidence of the signed mandate / delivery of the product etc.

For more information on the time limits for contesting and managing unpaid/returned direct debits, please refer to our article What should I do if I am in doubt about an SDD transaction?
If payment by SEPA Direct Debit is not included in your contract and you wish to activate it, please contact us, clearly stating the expected annual volume and average transaction amount.

How do I cancel a transaction?

A Sepa Direct Debit (SDD) Core/B2B payment instruction can be cancelled manually from your dashboard, providing that it has not been carried out by Lemonway.

Dashboard V1

In your dashboard V1, once you have identified the transaction in the payment account (use the filters provided if you need to), simply click on the Cancel Money-In button in the payment account on the left hand side of the Transactions table and then click on the Submit button.

Dashboard V2

In your dashboard V2, once you have identified the transaction in the operations list, simply click on the transaction id to reach the details page. Clid on Cancel Operations button, enter your password and click on the Submit button.

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The status of the relevant SDD transaction is then automatically changed from Pending to Faileure/Error.

What are the possible statuses of a transaction?

To find out which version of the dashboard you are using, please read the article How do I know which version of the dashboard I am using?

Successful Status

The Successful/Completed status indicates the successful completion of the transaction, and the crediting of the transaction amount to the target payment account, thus increasing the account balance.
The transaction is marked as Successful in your dashboard

Dashboard V1: mceclip1.png

Dashboard V2: mceclip0.png

Pending Status

The Pending status indicates that the transaction has not been credited to the target payment account, but that it could still potentially change to a Success or Failure status (or simply remain "pending" indefinitely). This means that your direct debit request has been accepted and is being processed/carried out. The status of the transaction will change to Success when the direct debit is actually credited to the Lemonway bank account.

Dashboard V1: mceclip3.png

Dashboard V2: mceclip2.png

Failure Status

The Failure/Error status indicates that the relevant transaction is incomplete and has permanently failed to be credited to the target payment account. In this case, Lemonway will cancel the direct debit on your instruction (chargeable/conditional service).

Dashboard V1: mceclip4.png

Dashboard V2: mceclip6.png mceclip7.png

My customer says he has been debited but the transaction is not showing as successful in the dashboard

In very rare cases (a bug in the bank information forwarded to Lemonway), a card transaction that has actually been debited from your customer's account may appear in your dashboard as pending or failed.
If this happens, please contact us and provide us with the information listed below:

  • URL of the relevant platform
  • Transaction ID (or transaction date and amount if not available)
  • Ideally - proof the customer has been debited (bank statement or screenshot clearly showing the debit)
  • Your instructions: change the status of the transaction to successful or refund the transaction

Once we have confirmed that the transaction is carried out, we will then be able to refund the transaction on your instructions.

What are the error codes?

The main reasons for Returned SDDs (Core or B2B) as well as the recommended follow-up steps are outlined below.
The return codes and their description are automatically included in the notes on the returned SDD transaction in your system.

RETURN CODE

CODE DESCRIPTION

RECOMMENDED CREDITOR ACTION

AC01

Incorrect bank details (e.g. invalid debtor IBAN, debtor's bank account not denominated in EUR)

• Contact the debtor to check the bank details

• Correct the debtor's bank details in your system

• Issue a new direct debit instruction

OR

• Decide on an alternative method of payment (e.g. bank transfer) with the debtor.

AC04

Account closed

• Contact the debtor to obtain new bank details

• Correct the debtor's bank details in your system

• Issue a new direct debit instruction

OR

• Decide on an alternative method of payment (e.g. bank transfer) with the debtor.

AC06

Blocked account

• Contact the debtor to obtain new bank details

• Correct the debtor's bank details in your system

• Issue a new direct debit instruction

OR

• Decide on an alternative method of payment (e.g. bank transfer) with the debtor.

AC13

Debtor account is not a business account (SDD B2B only)

• Contact the debtor to obtain his business/corporate account details

• Correct the debtor's bank details in your system

• Issue a new direct debit instruction

OR

• Decide on an alternative method of payment (e.g. bank transfer) with the debtor.

OR

• Set up a Core direct debit mandate with the debtor

• Issue a new direct debit instruction

AG01

Transaction not permitted on this type of account (e.g. savings account)

• Contact the debtor to obtain new bank details

• Correct the debtor's bank details in your system

• Issue a new direct debit instruction

OR

• Decide on an alternative method of payment (e.g. bank transfer) with the debtor.

AM04

Insufficient funds

• Ask the debtor to add funds to his account

• Issue a new direct debit instruction

OR

• Decide on an alternative method of payment (e.g. bank transfer) with the debtor.

AM05

Duplicate

• Determine if it is a genuine duplicate.

MD01

No mandate

(Mandate on the debtor's account no longer valid, mandate cancelled by the debtor, refund of unauthorised transaction, B2B mandate not submitted to the bank)

 

• Contact the debtor to obtain more information/to ask him to give the signed mandate to his bank (in the case of SDD B2B)

• Issue a new direct debit instruction

OR

• Decide on an alternative method of payment (e.g. bank transfer) with the debtor.

MD07

Debtor deceased

• Terminate the debtor's contract

MS02

Refused by debtor/unknown reason

• Contact the debtor

MS03

Unknown reason

(most common return code/catch-all)

• Contact the debtor

The "quality" of the return codes varies and depends on the debtor's bank. Lemonway has no additional information and is unable to contact the debtor's bank if a return code appears to be incorrect or unclear.

How do I refund a transaction carried out by direct debit / SDD mandate?

Direct debit refunds are not automated and require you to issue an outgoing bank transfer from the original payee's payment account to the original payer's bank account, previously entered in the payment account.
For more information, please see the article All you need to know about withdrawing funds from a payment account.

If you have doubts about a transaction

If you have doubts t about a transaction or transactions, please refer to the article What should I do if I am in doubt about an SDD transaction?

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