SEPA Direct Debit Schemes Ensure Consumer Protection, Says EPC

The European Payments Council (EPC), the co-ordination and decision-making body of the European payments industry, confirms that the single euro payments area (SEPA) Direct Debit (SDD) schemes developed by the EPC, in close dialogue with all market participants, ensure complete protection of consumers.

The SDD schemes are fully aligned with consumer rights as defined in the EU Payment Services Directive (PSD). Even exceeding the requirements of the PSD, the SDD Core scheme grants consumers a ‘no-questions-asked’ refund right during the eight weeks following the debiting of a consumer’s account, e.g. during this time any funds collected by SDD will be credited back to the consumer’s account upon request. In the event of unauthorised direct debit collections, the consumer’s right to a refund extends to 13 months as stipulated in the PSD.

In response to concerns voiced by the Bureau Européen des Unions de Consommateurs (BEUC), EPC chair Gerard Hartsink said: “The SDD schemes are built on the same business assumptions and basic trust between the parties involved as the established pre-SEPA, national direct debit model used for decades in the majority of EU Member States. Millions of consumers, firms and institutions are making direct debit payments based on this long-standing, proven and trusted relationship model in countries such as, for example, Germany (6.9 billion direct debits in 2007), the UK (3.0 billion), France (2.9 billion), Spain (2.2 billion) or the Netherlands (1.2 billion).”

In addition, banks servicing billers who collect direct debit payments must ensure that only trustworthy billers are able to collect payments via SDD. This is also in the interest of banks as they would have to cover any losses resulting from fraudulent and/or erroneous direct debits.

To help in meeting the preferences of consumers living in countries currently using an alternative direct debit model, the SDD includes the option to create mandates through the use of electronic channels – called e-mandates. With a mandate the consumer authorises a biller to collect payment by direct debit. In addition, the mandate authorises the consumer’s bank to debit the consumer’s account when a direct debit collection is presented. If the consumer issues an e-mandate, the mandate information stays directly with the consumer’s bank. In this case, the consumer’s bank has the option to verify whether the consumer authorised a direct debit collection.

Hartsink added: “The process of defining SEPA schemes catering to corporate enterprises, small and medium-sized businesses, public administrations and consumers across 32 countries can be compared to designing a car model: the basic model must meet key market requirements. At the same time, the model must be flexible enough to include options to add extras on demand. This concept provides maximum choice to customers while avoiding that a majority of customers has to buy features they do not need.”


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