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Direct Debit

Direct Debit

A direct debit is initiated by a creditor (for example, a utility company or real estate agency) to debit the account of a debtor.
There are various types (referred to as schemes) of direct debits:
  • SEPA Direct Debit Core
  • SEPA Direct Debit B2B
  • Internal Direct Debit (coming soon!)
  • Other national direct debit schemes (not yet available)

Sepa Direct Debit

With SEPA Direct Debit (SDD), companies can issue direct debits in Euros between accounts located in the SEPA zone (all EU countries + the UK, Iceland, Lichtenstein, Norway, and Switzerland). Prior to issuing SEPA direct debit instructions, the creditor must obtain a formal authorization from the debtor, which is referred to as a direct debit mandate. This mandate is created by the creditor and is signed/approved by the debtor outside of the SEPA network. A SEPA Direct Debit mandate is identified by a Unique Mandate Reference (UMR), while the creditor is uniquely identified on the SEPA network with a SEPA Creditor Identifier (SCI). The SCI x UMR couple must be unique across the SEPA network. Learn more about received direct debit mandates​
There are 2 types of SEPA Direct Debits:
  • SDD Core is the most widely used Sepa Direct Debit. It can be used to debit accounts owned by either natural or legal persons. The SEPA direct debit mandate is signed by the debtor and does not have to be provided by either the debtor or the creditor to their banks. Mandate information is embedded in every SEPA direct debit instruction sent by the creditor bank to the debtor bank, and the debtor bank does not have to verify the validity of the mandate with the debtor. The debtor is entitled to obtain a refund of an authorized collection on a no-questions-asked basis by request to the debtor bank during a period of eight weeks after being debited.
  • SDD B2B (Business To Business) can only be used to debit accounts owned by legal persons. The SEPA direct debit mandate is signed by the debtor. The mandate information or the mandate itself must be provided/confirmed by the debtor to their bank. Mandate information is embedded in every SEPA direct debit instruction sent by the creditor bank to the debtor bank, and the debtor bank must verify the validity of the instruction against the mandate or mandate information received from the debtor. The debtor is not entitled to obtain any refunds of an authorized collection.
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Reception of a SEPA Direct Debit instruction on a Swan account
To be acknowledged by the SEPA network, a SEPA direct debit instruction must be sent by the creditor bank prior to the debit date indicated by the creditor in the instruction. Once a SEPA direct debit instruction is received by Swan, there are two different cases:
  • The mandate information embedded in the SEPA direct debit instruction is not known from Swan/received for the first time:
    • SDD Core: Swan automatically creates the SEPA direct debit mandate with Enabled status. A transaction with the SepaDirectDebitOut type is created with Upcoming status. This transaction will be executed at the requested debit date.
    • SDD B2B: Swan automatically creates the SEPA direct debit mandate with ConsentInitiationPending status. A transaction with the SepaDirectDebitOut type is created with the Upcoming status. Swan must make sure that the Swan debtor has given their approval to the creditor on the received direct debit mandate information. The SEPA direct debit mandate created by Swan from the SEPA direct debit instruction must be consented by the debtor before the requested debit date. Once consent is received from the debtor, the SEPA direct debit mandate is switched to Enabled status. Learn more about received direct debit mandates​
  • The mandate information embedded in the SEPA direct debit instruction is already known from Swan/a SEPA direct debit mandate already exists with Swan:
    • if the underlying SEPA direct debit mandate has the Canceled or Suspended status, a transaction with the SepaDirectDebitOut type will be automatically created with Rejected status.
    • if the underlying SEPA direct debit mandate has the Enabled status, a transaction with the SepaDirectDebitOut type will be created with Upcoming status.

Execution of a SEPA Direct debit instruction received on a Swan account

On the debit date (6:00AM CET) of a SepaDirectDebitOut transaction, Swan performs various verifications:
  • Status of the underlying SEPA direct debit mandate: if the status is different from Enabledthe SepaDirectDebitOut transaction is switched to Rejected with the rejection reason in the rejectedReasonCode field
  • The available balance of the debtor account: if it is not sufficient to cover the SEPA direct debit amount, the SepaDirectDebitOut transaction is switched to Rejected with the rejection reason in the rejectedReasonCode field
If all verifications are performed successfully, the status of the SepaDirectDebitOut transaction is moved to Booked and the account's available balance is debited from the SEPA direct debit amount

Issuing a SEPA Direct Debit instruction from a Swan account

Coming soon!

Received Direct Debit Mandate

A received direct debit mandate is the expression of consent and authorization given by the debtor to the creditor to initiate direct debit collections and debit their account. A received direct debit mandate is associated to a Swan account and is represented at Swan with the receivedDirectDebitMandate object.
There are different types of received direct debit mandates:
  • SEPA Direct Debit Core mandate: it is signed by the debtor and does not have to be provided by either the debtor or the creditor to their banks. Mandate information is embedded in every SEPA direct debit instruction sent by the creditor bank to the debtor bank (Swan), and the debtor bank does not have to verify the validity of the mandate with the debtor. Under a SEPA Direct Debit Core mandate, the debtor is entitled to obtain a refund of an authorized collection on a no-questions-asked basis by request to the debtor bank during a period of eight weeks after being debited.
  • SEPA Direct Debit B2B mandate: it is signed by the debtor and the mandate information or the mandate itself must be provided/confirmed by the debtor to Swan. Mandate information is embedded in every SEPA direct debit instruction sent by the creditor bank to the debtor bank, and the debtor bank (Swan) must verify the validity of the instruction against the mandate or mandate information received from the debtor. The debtor is not entitled to obtain a refund of an authorized collection.
  • Internal Direct Debit (coming soon!)
  • Other national direct debit schemes (not yet available)

Received SEPA direct debit mandate

A received SEPA direct debit mandate comes with two main authorization types, represented in the API's sequence field: Recurrent SEPA direct debit mandates are those where the authorization by the debtor can be used for regular SEPA direct debits initiated by the creditor. OneOff SEPA direct debit mandates are those where the authorization is given once by the debtor to collect one single SEPA direct debit, an authorization that cannot be used for any subsequent transaction.

Creation of a received SEPA direct debit mandate

Received SEPA direct debit mandates can be created in two different ways:
  • Automatically by Swan from a received SEPA direct debit instruction:
    • SEPA Direct Debit Core: the received SEPA direct debit mandate is deemed valid by default and is created by Swan under the SepaDirectDebitCore scheme with the Enabled status
    • SEPA Direct Debit B2B: the received SEPA direct debit mandate needs to be consented to by an accountMembership with the CanInitiatePayments rights on the account being debited. It is created by Swan under the SepaDirectDebitB2b scheme with the ConsentInitiationPending status and switched to Enabled status once consent has been given using the enableReceivedDirectDebitMandate mutation
  • SEPA Direct Debit B2B only: by any accountMembership with the CanInitiatePayments rights on the account to which the received SEPA Direct Debit B2B mandate needs to be associated with, using the addReceivedSepaDirectDebitB2bMandate mutation with consent.

Suspension of a received SEPA direct debit mandate

A received SEPA direct debit mandate can be suspended using the suspendReceivedDirectDebitMandate mutation, by any accountMembership with the CanInitiatePayments rights on the account to which the received SEPA direct debit mandate is associated. Once the mutation is successfully executed, the received SEPA direct debit mandate is switched to Suspended status. At the reception date and debit date of a SEPA direct debit instruction, Swan verifies among other things the status of the underlying received SEPA direct debit mandate. The transaction is automatically rejected if the latter has Suspended status.

Re-Enablement of a received SEPA direct debit mandate

A received SEPA direct debit mandate with Suspended status can be switched back to its last status (Enabled for SEPA Direct Debit Core mandates, Enabled or ConsentPending for SEPA Direct Debit B2B mandates) by any accountMembership with CanInitiatePayments rights on the account to which the received SEPA direct debit mandate is associated using the enableReceivedDirectDebitMandate mutation.

Cancellation of a received SEPA direct debit mandate

A received SEPA direct debit mandate is automatically switched to the Canceled status by Swan in the following cases:
  • when the last executed SEPA direct debit (executedAt field of the receivedDirectDebitMandate object in the API) for a received SEPA direct debit mandate is 36 months older than the value of the signatureDate field of a received SEPA direct debit mandate (or in the case of SEPA direct debit B2B mandates, theconsentedAt field)
  • when the value of the sequence field of the received SEPA direct debit mandate is OneOff and when one SEPA direct debit transaction has already been received for the concerned account (whatever it's status)
When a SEPA direct debit instruction is received (therefore before the debit date/at reception), it is automatically switched to Rejected status by Swan when the underlying received SEPA direct debit mandate has Canceled status

Update on a received SEPA direct debit mandate

Updates on a received SEPA direct debit mandate are referred to as amendments in the SEPA world. There are four different types of Swan updates on received SEPA direct debit mandates:
  • A change in creditor name: the existing received SEPA direct debit mandate will be updated with the new name and an incremental value in the version field of the receivedDirectDebitMandate object
  • A change in creditor SEPA Creditor Identifier (SCI): the existing received SEPA direct debit mandate will be updated with the new SCI and an incremental value in the version field of the receivedDirectDebitMandate object
  • A change in Unique Mandate Reference (UMR): the existing received SEPA direct debit mandate will be updated with the new UMR and an incremental value in the version field of the receivedDirectDebitMandate object
  • A change in debtor IBAN:
    • if the new IBAN belongs to the same account, the existing received SEPA direct debit mandate will be updated with the new debtor IBAN and an incremental value in the version field of the receivedDirectDebitMandate object
    • if the new IBAN does not belong to the same account, the existing received SEPA direct debit mandate will be switched to Canceled status and a new SEPA received direct debit mandate will be created
Received SEPA direct debit mandates can be updated in two different ways:
  • SEPA Direct Debit Core and SEPA Direct Debit B2B: automatically by Swan from a received SEPA direct debit instruction including amendment information or
  • SEPA Direct Debit B2B only: by any accountMembership with CanInitiatePayments rights on the account to which the received SEPA Direct Debit B2B mandate needs to be associated with, using the updateReceivedSepaDirectDebitB2bMandate mutation with consent.

R-Transactions

SEPA direct debit transactions that result in exception processing are referred to as ‘R-transactions’. There are four different types of R-transactions on received SEPA direct debit transactions

Reject

Any account member with CanInitiatePayments rights on the account for which a SEPA direct debit instruction has been received can contact Swan to ask for a rejection of the concerned transaction while it still has Upcoming status (i.e. before it is actually debited). The transaction is then switched to Rejected status. This does not impact the account's available balance.

Cancellation

A received SEPA direct debit instruction with Upcoming status can be canceled by the creditor and is then automatically switched to Canceled status. This transaction will not impact the account's available balance.
This exterior event can be simulated in the Sandbox using the dashboard's Event Simulator.

Refund

Any account member with CanInitiatePayments rights on the account for which a SEPA direct debit Core instruction has been debited (therefore in the Booked status) can contact Swan to ask for a refund (within 8 weeks following debit date) of the concerned transaction. A SepaDirectDebitOutReturn transaction is then created with Booked status.

Reversal

A received SEPA direct debit transaction with Booked status can be reversed by the creditor up to 5 days following the debit date. A SepaDirectDebitOutReversal transaction is then created with Booked status.
This exterior event can be simulated in the Sandbox using the dashboard's Event Simulator.