Unpaid SEPA Direct Debits

On the settlement or due date of a SEPA Direct Debit (SDD Core or B2B) or just after that, the debtor's bank can carry out an interbank return to the creditor's bank for their own reasons (insufficient funds, no mandate, debtor account blocked or closed). 

Returns have to be made within 5 banking business days for an SDD Core transaction and 3 banking business days for an SDD B2B transaction, or in response to a request from the debtor (refund request).

Returned SDDs result in:

  • A re-credit of the total amount of the debt to the debtor (partial refunds are not permitted) from the debtor's account
  • A debit of the same amount from the creditor's account

 

SEPA Direct Debit payment disputes

👉   Identify a returned SEPA Direct Debit (SDD) in the dashboard

👉   SEPA Direct Debit (SDD) return deadlines

👉   Main reasons for returned SEPA Direct Debit (SDD) payments


Identify a returned SEPA Direct Debit (SDD) in the dashboard

  • From the Dashboard, click Operations.
  • Click All.
  • Set the following filters: 
    1. Method: Direct Debit
    2. Type: Outgoing
    3. Status: Completed
    4. Comment: Chargeback

An SDD return, just like a card chargeback, results in 2, or even 3, transactions on your dashboard:

  • The return transaction in the customer payment account to which the original transaction was credited, showing the reason for the return in the notes field (as reported to Lemonway by the debtor's bank) and the ID of the original transaction. In the event that the balance of the relevant customer payment account is insufficient for the return transaction to be debited, Lemonway automatically performs a P2P transfer from your merchant payment account (SC) to the relevant customer payment account for the shortfall before proceeding with the Return transaction.
  • The transaction corresponding to the return fee charged by Lemonway (P2P from your merchant payment account to the Lemonway payment account for the amount specified in your contract).

 

SEPA Direct Debit (SDD) return deadlines

The return requests initiated by the debtor are possible only for SDD Core. The SDD B2B cannot be disputed by the debtor. Only an interbank return can be applied.

 

D = debit date of the debtor's account/banking business days

SDD CORE SDD B2B
  • Between D and D + 8 weeks: return possible with no reason/justification required from the debtor and automatically processed by the debtor's bank
  • Between D + 8 weeks and D + 13 months: return only possible if the debtor disputes the payment on the grounds of an unauthorised transaction and subject to the debtor's bank undertaking the proof of consent verification procedure

 

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)                                 

• Contact the debtor to check the bank details

• Correct the debtor's bank details in your Company 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 Company 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 Company 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 Company 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 Company 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 an 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

 

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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