SEPA Direct Debit for merchants
Overview​
Merchants can accept payments with SEPA Direct Debit.
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.
Direct debit advantages​
Generally, accepting payments with direct debit instead of credit transfers improves convenience, accuracy, and cash flow for merchants.
- 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.
- 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.
- 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.
Refer to billing for information about fees associated with merchant SEPA Direct Debit transactions.
Schemes: Core & B2B​
Swan offers two SEPA Direct Debit schemes: Core and B2B.
You can choose to use one or both schemes according to your use case.
| Specifications | Core | B2B |
|---|---|---|
| Eligible account types | Individual and company accounts (natural or legal persons) | Company only (legal persons) |
| Refund requested by debtor | Up 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 | 3-5 business days after execution date (example: insufficient funds, debtor account closed) | |
| Mandate provided to and registered by the debtor's PSP | Not required | Mandatory |
| Validity of the mandate (consent) confirmed with the debtor by the debtor's PSP for each transaction | Not required | Mandatory |
| Refusal and rejection timeline | Up to the date and time of settlement execution | |
| Creditor cancellation | Up to the due date and time | |
| Creditor reversal | Up to 5 business days after due date and time | |
| Frequency | One-off and recurrent | |
PSP stands for payment services provider.
SEPA Creditor Identifier (SCI)​
SEPA Creditor Identifiers are unique reference codes that identify each creditor participating in a SEPA Direct Debit scheme. These identifiers are unique to each merchant and help banks sort transactions by merchant to ensure those transactions are routed correctly.
SCIs include several elements, including:
- ISO country code
- Two-digit checksum
- Creditor business activity code
- National identification feature
For example, FR12ABC0123456789 is an SCI from France (FR) with the check number 12, and the business activity code ABC, ending with the national identification feature that can change country to country (here, 0123456789).
Options for SEPA Creditor Identifiers​
Swan provides an SCI, and merchants can also choose to use their own.
Both meet all SCI requirements. It's important to note, however, that Swan's provided SCI always mentions Swan, which appears on a user's transaction history.
Merchants might prefer to use their own SCI for a more customized user experience. Users would see the merchant's name instead of Swan on their transaction history, reducing friction and the risk of transactions looking suspicious to users. The merchant's bank would also see the label Swan in disputes, so having the merchant name appear instead could also ease bank relations.
Regardless of the type of SCI, it's good practice to include your merchant's name in the label field for all SEPA Direct Debit transactions.
If a merchant in France expresses interest in using their own SCI but they don't have one, Swan can help them get their identifier. Send an email to support@swan.io to start the process.
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 method | Rolling reserve | Default amount |
|---|---|---|
| SEPA Direct Debit - Core | ✓ Yes | 15% over 15 business days |
| SEPA Direct Debit - B2B | ✓ Yes | 100% over 3 business days |
Payment mandates​
A payment mandate is a written authorization from a debtor that allows a creditor to initiate a direct debit transaction from their account. Without a mandate, the creditor can't legally debit the debtor's account.
Payment mandates are mandatory for all SEPA Direct Debit transactions.
One payment mandate can cover as many debit transactions as needed between the debtor and the merchant, provided the mandate is Recurrent.
Declaring mandates​
Partners are responsible for obtaining and declaring 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 our API.
After declaring the mandate, you can upload it to your Swan Dashboard as a PDF. This isn't mandatory but might be helpful if a debtor's bank requests a copy of the signed mandate. Note that B2B mandates must be declared to the debtor's bank.
One-off mandates​
Some mandates can only be used one time.
When the sequence value is OneOff (instead of Recurrent), the received SEPA Direct Debit payment mandate is canceled automatically after the transaction is executed, regardless of the transaction status.
Required information​
In addition to a clear description of payment rights, SEPA Direct Debit payment mandates must include the following information. Otherwise, the mandate is considered invalid.
| Information | Description |
|---|---|
| Mandate title | Choose one of the following options:
|
| Mandate reference |
|
| Payment type | Choose one of the following options:
|
| Merchant (beneficiary) information |
|
| Debtor information |
|
Settlement date and booked time​
SEPA Direct Debit transactions are booked at 20:00 Central European [Summer] Time (CET/CEST) on the settlement date if no rejection or cancellation has been issued or received. Note that settlements dates exclude weekends and SEPA holidays.
| Transaction initiated | Booked |
|---|---|
| Before 11:30 Central European [Summer] Time (CET/CEST) | Next business day at 20:00 Central European [Summer] Time (CET/CEST) |
| After 11:30 Central European [Summer] Time (CET/CEST) | Within two business days at 20:00 Central European [Summer] Time (CET/CEST) |
Days are measured as business days. Time is expressed with the 24-hour clock.
R-transactions​
Returns and refunds are only possible with Core and can be requested up to 8 calendar weeks after due date and time.
Rejected​
When a SEPA Direct Debit Core transaction is rejected, the debtor's account is not debited.
A SEPA Direct Debit Core transaction might be rejected for the following reasons (this list is not exhaustive):
- Incorrect account number
- Debtor canceled the payment mandate
- Account is closed
- Insufficient funds
- Technical issues
- Debtor requested refusal of the debit before the date and time of the settlement execution
When a SEPA Direct Debit Core transaction is rejected, regardless of the reason, the merchant receives a notification and can attempt a new SEPA Direct Debit at a later date.
Returned​
When a SEPA Direct Debit Core 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.
A SEPA Direct Debit Core transaction might be returned for the following reasons (this list is not exhaustive):
- Debtor disputes the payment
- Insufficient funds
- Invalid payment mandate (example: the mandate was not declared to the debtor bank)
When a SEPA Direct Debit Core transaction is returned, 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.