SEPA Direct Debit payments

SEPA Direct Debit payments

πŸ‘‰   How it works

πŸ‘‰   Main features of SEPA Core and B2B

πŸ‘‰   Main statuses of a SEPA Direct Debit/SDD Mandate

πŸ‘‰   Cancel a SEPA Direct Debit/SDD Mandate

πŸ‘‰   Refund a SEPA Direct Debit/SDD Mandate

πŸ‘‰   My customer says they have been debited but the transaction is not showing as completed

πŸ‘‰   Main reasons for returned SEPA Direct Debit (SDD) payments

 

How it works

A SEPA Direct Debit allows you to collect payments in euros 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 β€œrebilling” 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.

 

Main features of SEPA Core and B2B

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 Completed
  • In the event of an unpaid/returned direct debit: an SDD Money-Out transaction with a Completed 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

 

πŸ’‘ Learn more about time limits for contesting and managing unpaid/returned direct debits
If payment by SEPA Direct Debit is not included in your contract and you wish to activate it, get in touch πŸ‘‰ with us with the expected annual volume and average transaction amount.

 

Main statuses of a SEPA Direct Debit/SDD Mandate

SEPA Direct Debit/SDD Mandate can have multiple statuses:

  • βœ… Completed: the transaction was successful and the transaction amount is credited to the target payment account, increasing the account balance.
  • πŸ’¬ Pending: the transaction has not been credited to the target payment account,  but that it could still potentially change to a Completed or Error status. The Pending status is also used for planned transactions, such as subscriptions, we will have the future sdd mandates already in the dashboard.
  • 🚫 Error: the transaction is incomplete and failed to be credited to the target payment account. This status indicates that the transfer has been cancelled by Lemonway (e.g., incorrect beneficiary information provided by the bank) or on your instructions (chargeable/conditional service).

 

Cancel a SEPA Direct Debit/SDD Mandate

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

  1. From the Dashboard, click Operations. A menu unfolds.
  2. Click All.
  3. Search for the transaction ID in the first column.
  4. Click the ID number.
  5. On the Operation details page, click Cancel operation.
  6. Enter your password for confirmation.
  7. Click Confirm.

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

 

Refund a SEPA 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.

πŸ’‘ Learn more on πŸ‘‰ how to withdraw funds fom a payment account.

 

My customer says they have been debited but the transaction is not showing as completed

In very rare cases (a bug in the bank information forwarded to Lemonway), a SDD mandate that has actually been debited from your customer's account may appear in your dashboard as pending or error.

If this happens, get in touch with 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: either change the status of the transaction to successful or refund the transaction

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

 

Main reasons for returned SEPA Direct Debit (SDD) payments

We’ve listed the main reasons for Returned SDDs (Core or B2B), as well as the recommended follow-up steps.

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)

β€’ Contact the debtor to check the bank details

β€’ Correct the debtor's bank details in your Company system

β€’ Issue a new direct debit instruction

OR

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

AC04

Account closed

β€’ Contact the debtor to obtain new bank details

β€’ Correct the debtor's bank details in your Company system

β€’ Issue a new direct debit instruction

OR

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

AC06

Blocked account

β€’ Contact the debtor to obtain new bank details

β€’ Correct the debtor's bank details in your Company system

β€’ Issue a new direct debit instruction

OR

β€’ 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)

β€’ Contact the debtor to obtain his business/corporate account details

β€’ Correct the debtor's bank details in your Company system

β€’ Issue a new direct debit instruction

OR

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

OR

β€’ Set up a Core direct debit mandate with the debtor

β€’ Issue a new direct debit instruction

AG01

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

β€’ Contact the debtor to obtain new bank details

β€’ Correct the debtor's bank details in your Company system

β€’ Issue a new direct debit instruction

OR

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

AM04

Insufficient funds

β€’ Ask the debtor to add funds to his account

β€’ Issue a new direct debit instruction

OR

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

AM05

Duplicate

β€’ 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 an unauthorised transaction,
B2B mandate not submitted
to the bank)

 

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

β€’ Issue a new direct debit instruction

OR

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

MD07

Debtor deceased

β€’ Terminate the debtor's contract

MS02

Refused by debtor/unknown reason

β€’ Contact the debtor

MS03

Unknown reason

(most common return code/catch-all)

β€’ Contact the debtor

Note

The relevance of the return codes 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.

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