SEPA Direct Debit Mandate

A SEPA Direct Debit Mandate, also known as SDD Mandate, is the authorization through which the debtor allows the creditor to collect payment from his bank account and instructs its bank to pay those collections. As a general rule, the SDD mandate is provided by the creditor and it has to be completed and signed by the debtor in order to come into effect.

The SDD mandate is a prerequisite to collect payment through the SEPA Direct Debit scheme and without it the creditor has no permission to initiate collections.

The SEPA Direct Debit Mandate can be issued in the following forms:

• Paper form: the SDD Core Rulebook provides a SEPA Direct Debit Mandate illustration and specifies the information that has to be included in the mandate in its section 4.7.2. However, in practice the SDD mandate can be structured in different ways as long as it does not lose any essential information and remains compliant with the rulebook. Indeed, the European Payments Council (EPC) offers guidance to creditors on the creation of paper mandates and even provides translations of the mandate text into the different SEPA languages.
• E-mandate: the rulebook offers the possibility to set up and issue mandates making use of electronic channels. This is an optional service offered by debtor banks through the use of their existing online banking credentials, which means that no further identification forms are required and that the debtor’s bank has the possibility of verifying the authorization of a direct debit collection requested by a creditor.

In line with the SDD Rulebook, the following information has to be provided in a SDD Mandate:

• The headline “ SEPA Direct Debit Mandate“
• The approval for collection
• The information concerning the debtor’s rights for the reimbursement of funds
• The creditor and debtor’s unique collection reference and identification data

Additionally, the SDD mandate has to be in the language of the debtor’s country of residence. In the case that there is more than one official language in his country of residence, the information should be translated in all official languages. If the creditor is not certain about the debtor’s language, an English translation should also be inserted into the text.

According to the European Payments Council (EPC) the SDD mandate automatically expires 36 months after the date of the latest initiated collection. In other words, if a collection does not take place in a period of 36 months, the creditor is obliged to terminate the SDD mandate and collection initiation cannot be done based on that mandate. The termination of a SEPA direct debit mandate is a matter restricted to the creditor and the debtor and their banks are by no means implicated in the process. It is also important to keep in mind that the 36 months start running even if the payment collection was denied, reimbursed or returned. In the case that debtor and creditor come to an agreement to reinstate direct debit payment collection a new mandate has to be set up.

The creditor has the obligation to store the mandate as long as it is valid and for at least 14 months after the last payment collection. However, the mandate also has to be stored after it has expired at best for a time interval equivalent to the deadline for reimbursement of illegitimately collected funds.