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Internal Direct Debit for merchants

Overview​

Merchants can use Internal Direct Debit to accept payments when the merchant and the debtor are using Swan accounts within the same Swan project. Swan plays the role of the merchant bank, the clearing and settlement mechanism, and the debtor bank.

If the merchant and debtor aren't using Swan accounts within the same Swan project, use SEPA Direct Debit for merchants instead.

Merchants only

This section only applies to merchants initiating incoming direct debits to accept payments.

Visit the direct debit payments section for information about instructions for an outgoing direct debit, or account funding to initiate a direct debit to your own Swan account.

Advantages of using direct debit​

Generally, accepting payments with direct debit instead of credit transfers improves convenience, accuracy, and cash flow for merchants.

  1. Convenience
    • After a customer agrees to a recurring direct debit transaction, the payments are automatically debited from their account on the agreed-upon date.
    • This reduces manual intervention for each transaction. For certain verticals (rental management, for example), an automated debit is common practice and makes sense for the debtor and the merchant.
  2. Accuracy
    • With direct debit, there is less chance that a payment is late, for the incorrect amount, or even sent to the wrong merchant. As a result, direct debit also helps make reconciliation use cases easier.
  3. Improved cash flow
    • Merchants can plan for payment arrival and amount. This means they can better predict and control their revenue flow, which leads to more accurate financial planning.

Schemes: Standard and B2B​

Swan offers two Internal Direct Debit schemes: Standard and B2B. You can choose to use one or both schemes according to your use case.

SpecificationsStandardB2B
Eligible account typesIndividual and company accounts (natural or legal persons)Company only (legal persons)
Refund requested by debtorUp to 8 calendar weeks after execution, no questions asked

Up to 13 months after execution if there wasn't a valid mandate or if the payment wasn't authorized
Not possible
Returned by debtor's bank
5 business days after execution dateNot possible
Mandate provided to and registered by SwanNot requiredMandatory
Validity of the mandate (consent) confirmed with the debtor by Swan for each transactionNot requiredMandatory
Refusal and rejection timelineUp to the date and time of settlement execution
Creditor cancellationUp to the due date and time
Creditor reversalUp to 5 business days after due date and time
FrequencyOne-off and recurrent

Rolling reserve​

Rolling reserve is a policy Swan applies to merchant transactions to protect the merchant and Swan against various risk factors, primarily insufficient funds and attempted fraud. The reserved amount acts as a safety net to cover potential loss for both Swan and the merchant.

Rolling reserve is expressed as a percentage over a period of time (example: 10% of the payment amount over 30 business days), and applies to most payment methods used by merchants to accept payments with Swan.

For the indicated period of time, the amount isn't part of the merchant's available account balance, after which the funds are released to the merchant and can be used.

Rolling reserve is held in a non-interest bearing reserve for transparency between Swan and merchants, therefore reducing the risk of a conflict of interest between the two parties.

Payment methodRolling reserveDefault amount
Internal Direct Debit - Standard✓ YesDetermined by a merchant profile risk assessment
Internal Direct Debit - B2B☒ Non/a

Payment mandates​

Mandatory mandates

Payment mandates are mandatory for B2B Internal Direct Debit transactions. Mandates are optional but recommended for Standard.

Partners are responsible for handling payment mandates. You can either include them in your Terms and Conditions or generate mandates and have them signed using electronic signature.

When the mandate is ready, declare it to Swan through the API.

Required information​

Internal Direct Debit payment mandates must include the following information. Otherwise, the mandate is considered invalid.

InformationDescription
Mandate titleChoose one of the following options:
  • Standard Internal Direct Debit Mandate
  • B2B Internal Direct Debit Mandate
Mandate referenceUnique identifier for the mandate, visible on the debtor's bank statement
Payment typeChoose one of the following options:
  • Recurrent
  • One-off
Merchant (beneficiary) information
  • Merchant name
  • Merchant account holder address
Debtor informationChoose one of the following options:
  • Debtor's account number
  • Debtor's IBAN

If the debtor doesn't have a Swan account upon creation of the mandate, include their identification information instead:
  • Individual: given name, family date, and date of birth
  • Legal: name and SIREN

Sample content​

Mandate for a debtor with a Swan account​

If the debtor has a Swan account, you can include the following content in the mandate or in your Terms and Conditions.

By confirming this mandate form, you authorize [merchant name] to send instructions to Swan to debit your account and Swan to debit your account, in accordance with the instructions from Swan.

This mandate is only intended for business-to-business transactions.

You are not entitled to a refund from your bank after your account has been debited, but you are entitled to request your bank not to debit your account up until the day the payment is due.

Mandate for a debtor without a Swan account​

If the debtor does not have a Swan account when the mandate is generated, you might choose to include the following content in your Terms and Conditions.

By confirming this mandate form, you authorize [merchant name] to send instructions to Swan to debit the account that will be opened in your name at Swan once you agree to these Terms & Conditions and Swan to debit your account, in accordance with the instructions from Swan.

This mandate is only intended for business-to-business transactions.

You are not entitled to a refund from your bank after your account has been debited, but you are entitled to request your bank not to debit your account up until the day the payment is due.

Timeline: debtor without Swan account

The debtor must create a Swan account within seven days of signing the mandate.

After the debtor creates their Swan account, you are responsible for sending them an updated PDF version of the signed mandate. The PDF must include the original signature date, and either their Swan account number or their Swan BIC and IBAN.

Signature​

Your clients need to sign the payment mandate for Swan to accept it. You can either use a qualified electronic signature or have your client check a Terms and Conditions checkbox.

Local requirements

We recommend confirming local requirements as laws and regulations vary by location.

Qualified electronic signature​

Signing the payment mandate with a qualified electronic signature must meet the following criteria:

  1. The person who signed the mandate is clearly identified, often based on information included in your commercial contract with the debtor. They might also identify themselves by logging in to your platform.
  2. Strong customer authentication is complete. It must include two factors:
    1. Personal identification number (PIN) or a password, and
    2. One-time password (OTP) sent by a text message to the person's mobile phone.
  3. Complete authorization through the electronic signature.

Terms and conditions checkbox​

Your clients can also sign the payment mandate by checking a Terms and Conditions checkbox. Your client is already clearly identified by being logged in to your platform.

Received mandates​

A received direct debit mandate is created after the debtor's account receives the InternalDirectDebitOut transaction. The process is different for B2B and Standard, and one-off mandates are also possible.

Received mandate typeDescription
B2B
  1. Mandate created with the status ConsentInitiationPending.
  2. Before the debtor can consent, you must declare the payment mandate.
  3. Debtor must consent, but only the first time the mandate is used.
Standard
  1. Mandate created after a first payment is accepted.
  2. You must enable the mandate by using the debtor's user access token with CanInitiatePayments permissions to call the enableReceivedDirectDebitMandate mutation.
  3. Exception: if a mandate with the same merchantIdentifier, reference, and accountId already exists, a new mandate is not created.

One-off mandates​

Some mandates can only be used one time.

When the sequence value is OneOff (instead of Recurrent), the received internal direct debit payment mandate is canceled automatically after the transaction is executed, regardless of the transaction status.

Settlement date and booked time​

Internal Direct Debit transactions are booked at 18:00 Central European [Summer] Time (CET/CEST) on the settlement date.

For both B2B and Standard, the settlement date is one day after (D+1) initiating the debit if transactions are sent before 12 noon.

Day & time

Days are measured as business days. Time is expressed with the 24-hour clock.

R-transactions​

R-transaction availability

Returns and refunds are only possible with Standard and can be requested up to 8 calendar weeks after due date and time.

Rejected​

When an Internal Direct Debit Standard transaction is rejected, the debtor's account is not debited.

An Internal Direct Debit Standard transaction might be rejected for the following reasons (this list is not exhaustive):

  • Incorrect account number
  • Debtor canceled the payment mandate
  • Insufficient funds

Regardless of the reason, the merchant receives a notification and can attempt a new Internal Direct Debit at a later date.

Returned​

When an Internal Direct Debit Standard transaction is returned, the debtor's account is debited the amount, but the payment is reversed and the funds return to the debtor's account.

An Internal Direct Debit Standard transaction might be returned for the following reasons (this list is not exhaustive):

  • Debtor disputes the payment
  • Payment was made in error
  • Insufficient funds

Regardless of the reason, the merchant is notified about the return. They can investigate the reason for return and take whatever action is necessary, which might be refunding the payment or disputing the return with the debtor's bank.

Guides​