• As a creditor, you should ask your payment service provider which variants of electronic mandates it accepts as part of your contractual agreement on SEPA direct debit (SDD) collections, and what the benefits, costs and risks of these variants are for you as a creditor. Information on national requirements relating to the legal validity of SDD mandates can be requested from the national competent authorities (see the list of national competent authorities).
• The choice of the mandate arrangements for SEPA direct debits is important both from a workflow and from a risk perspective. An electronic mandate is usually easy to set up, fast in transmission and low in cost (since it does not need to be printed, signed and returned in paper form). However, depending on the individual circumstances an electronic mandate issued via the internet could also provide less evidence in case of disputes. The identity of the payer is not always fully verified. Verification can, for instance, be ensured by strong customer authentication (especially for new customers). Furthermore, it may be necessary to check whether the payer’s account for which the SDD mandate is issued really exists and whether the customer is actually the holder. This can, for instance, be confirmed by the payment service provider of the payer’s account (e.g. the consumer’s bank).
• It is important for creditors to be aware that the burden of proof will lie with them if the payer disputes the authorization of the SEPA direct debit after a collection. The creditor should be able to prove that a valid mandate for the collection was actually received. Otherwise the collection would be categorised as UNAUTHORIZED, in which case the payer has a legal right to obtain a refund up to 13 months after the collection (rather than up to eight weeks, the interval within which an unconditional refund can be obtained for legally valid mandates). Proving validity in the event of a dispute can be especially difficult for creditors in the case of cross-border transactions, owing to potential differences in the applicable law. A user-friendly pan-European SOLUTION for proof-safe electronic mandates via the internet has not YET been established.
• The Secure Pay Forum (CONSISTING of supervisors and overseers in Europe dealing with the security of retail payments, such as internet payments) recommends that payment service providers apply as of 1 February 2015 strong customer authentication when issuing an electronic mandate.
• The European Payments Council (EPC) has developed the concept of an operating model for electronic mandates that is based on qualified digital signatures and on the involvement of the payer’s and the creditor’s payment service providers. The EPC made it clear that it does not prohibit other types of electronic mandate solution for the SDD; it should however be understood that other types of electronic mandate solution – although legally valid – sometimes do not provide the creditor with full certainty that the direct debit is authorized by the payer.
• In many countries, creditors use models for electronic mandates without the involvement of the payer’s or the creditor’s payment service providers. These models can continue to be used for SEPA direct debits under certain conditions (e.g. the German authorities explicitly confirmed the CONTINUING possibility of such practices in Germany, based on the individual contractual agreement between creditor and payment service provider). However, such a practice has implications for the creditor’s risk exposure: if the creditor cannot prove (in the event of a dispute) that the electronic mandate was really authorized by the payer holding the account, the payer has the right to obtain a refund up to 13 months after the collection.

The establishment of a user-friendly pan-European solution for proof-safe electronic mandates for SEPA direct debits could help reduce the risk of such practices for the creditor.

Two European legal acts are of relevance for SEPA direct debit mandates:

• The Payment Services Directive
• The SEPA migration end date regulation.

The establishment of a user-friendly pan-European solution for proof-safe electronic mandates for SEPA direct debits could help reduce the risk of such practices for the creditor.

The establishment of a user-friendly pan-European solution for proof-safe electronic mandates for SEPA direct debits could help reduce the risk of such practices for the creditor.

Two European legal acts are of relevance for SEPA direct debit mandates:

The establishment of a user-friendly pan-European solution for proof-safe electronic mandates for SEPA direct debits could help reduce the risk of such practices for the creditor.