The key questions up front
SEPA direct debit is simply a payment, from one party to another.
However, the main difference between what is generally considered a payment, where someone logs onto their banking portal to send money to a 3rd party, is that with direct debit the receiving party instructs their bank to submit a request to take the funds from the payer’s bank account on a particular date.
Of course the payer should be made aware of this before the debit happens.
This debiting of the payer’s account is permitted only where the payer has provided their permission, to do so otherwise is just disrespectful but also unlawful. Thankfully there are protections in place at the SEPA direct debit scheme level to deal with such carry on, specifically designed to protect the payer.
There are mainly two things you need in order to use direct debit to collect from your customers:
1. Access to the SEPA direct debit scheme, this is where your bank comes in.
2. A software tool to handle the technical stuff and the connection to your bank, enter DebaPay.
When connected to the scheme with a unique SEPA ID, you're good to go. We can explain the bank piece in terms of obtaining your SEPA ID.
We add your ID to DebaPay, you then start getting approval from your customers to debit their accounts and start collecting. We cover SEPA direct debit mandates below, the customer approval piece.
Well for a start, SEPA direct debit can be used to debit your customer's account once, or once every so often, OR it's used to collect on a recurring basis. The latter is a common use case, where an ongoing service is being delivered and service/maintenance fees need to be collected maybe every month.
We see numerous different types of business using direct debit ranging from services and distribution to professional services and leisure, it varies greatly.
The easiest thing is to speak with us, we'll go through how the service might be able to help you.
1. Getting paid on time. This is critical. We have first hand knowledge here, it's part of why we created the business. Waiting for payment, chasing people and the uncertainty, it's stressful. Getting paid on time gives you options, be it to invest in the business, buy materials or simply pay off debt. You're in control.
2. Solid cashflow. Knowing when cash is due in is a serious advantage. You can plan spending, you can show proof of funds and have a line of sight on cashflow should you need to raise capital.
3. Space in mind. Many of our customers remember what life was like prior to introducing direct debit, it's a fantastic means of assisting the Credit Control function in any size of company. Helen and her team in our short explainer video can vouch for that.
The mandate is simply an authorisation by your customer to debit their account.
There are a few ways to capture this authorisation, by phone, emandate or paper mandate.
Here at DebaPay we support both emandate and paper mandate.
Emandate
Your customer receives a link to an on-line form where they enter their details and sign/approve the mandate to enable you collect from their account. On approval they receive an email confirmation. All the relevant data is captured in line with the guidelines provided by the Banking & Payments Federation of Ireland (BPFI).
Paper mandate
Similar to the emandate but a little more retro. In this case you would present a paper form to your customer and they add the required details, their name and IBAN etc. You would then enter these details on DebaPay which sets up the system to enable you to collect from their account.
There are a few ways to use DebaPay. It can be used as a standalone Billing and Payment system where it's used as the primary means of payment collection, especially where a business doesn't want to use card payments.
It can also sit along side other payment services like card processing. Many business support numerous payment methods in order to provide a wide range of payment options to their customers. We support many such customers, typically handling the recurring payments within the business while card processing is catering for point of sales transactions etc.
DebaPay provides API connectivity for businesses that streamline their collection processing. Amounts due for collection are passed to DebaPay via RESTful API, simplifying the regular processing.
Why not speak with us to explore if the service is of benefit to you, if nothing else we'll both learn a little.
Here at DebaPay we've been helping businesses collect payment via SEPA direct debit since 2015, we're familiar with direct debit for even longer. We have many years of knowledge and experience so we believe we have a sound understanding of how to provide a great service in this space.
Like most businesses we want to grow. The way we see this happening is by providing a great service and by listening to what our customers want and need.
It's sometimes challenging to balance service development to meet customer requests but it comes down to caring about what we do and we're passionate in this regard.
The first step is speaking with us, the starting point of what could become a great adventure for us both.
Some other interesting questions
SEPA direct debit collections are based on debit dates, the date the money leaves your customer account and credits your account.
Example: in order to collect from your customers on the 5th of the month, the collection instructions must get to your bank no later than the 4th, the day before the debit date.
The bank processes the SEPA direct debit requests submitted to them, the funds leave your customer's account on the 5th and credits your account (the account of the receiving party) on the same date.
Collections fail, this is a fact of life. The customer's account may be closed or funds may not be available in the account on the debit date.
When this happens the bank informs DebaPay electronically and the payment within DebaPay is duly marked as failed. The merchant is advised of the failure, typically at that point the merchant engages their customer to agree how to collect the outstanding amount.
If your system is hooked into DebaPay via API it will take in this "failure" update electronically.
This typically depends on the setup of the payer's bank account. If the account is setup such that all authorisers on the account must sign, emandates are not supposed to be used for approving SEPA direct debit mandates. In this case the payer must sign a paper mandate.
This really comes down to your relationship with your customers and how you introduce SEPA direct debit. It's a highly efficient service for both parties, one just needs to make sure the permission to debit a customer's account is not abused.
When introducing any new service it's important to be clear in communicating how it's going to work, what's expected from your customer and even more important what your customer can expect from you.
The clearer the communication the better the result. Look to secure buy-in from the off, transparency is key:
"We need you to sign up to this"
"..we'll collect from you on this date"
"..we'll advise you of any changes to the amount being collected where necessary",
"cancelling this is not a problem if necessary"
It's beautiful when you do it right.
We add to this list from time to time as we listen to our customers and review industry developments.
Please feel free to contact us should you need to ask us anything, simply click the following button or call us on 0906400199.