New: Collect SEPA Core Direct Debits From Your Customers

Oliver November 2020 Fintech Content Editor 7 min

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Since spring of this year, you can let Direct Debits collected from your Penta account. Our team has worked hard to be able to offer you SEPA Core Direct Debits for your company. You can now collect SEPA Direct Debits from your customers. By the way, Penta is the first challenger bank in Germany that can offer you this procedure digitally, which hopefully will help your business a lot. But let us explain the cryptic terms and differences between the Direct Debit schemes.

What are SEPA Direct Debits?

Direct Debit is a cashless payment method whereby a bank or a financial service provider transfers money from the payer’s account to the beneficiary’s account. These single or periodic payments are initiated by the beneficiary after authorization has been given by a mandate.

What the SEPA Core Direct Debit Scheme at Penta Means for You Now

From now on, the SEPA Core Direct Debit scheme is available to you at Penta. With this type of Direct Debit you can now collect payments directly from your customers or other payment partners. Your payers can be private individuals and business customers who hold their accounts in the euro payment area (SEPA). This means that you can have single and recurring payments collected automatically at a set frequency and on a set date.

You are no longer dependent on time-consuming checking of incoming payments via bank transfers. SEPA Core Direct Debits, for example, are particularly suitable for subscriptions or monthly payments with a constant amount.

We know that this new possibility means great relief for the financial management of your company. For the following legal forms we can offer SEPA Core Direct Debits now:

A further condition is that your company exists for more than a year and that the date of foundation was at least 12 months ago. Do you run a company in a different legal form and now ask yourself why we cannot offer you the SEPA Core Direct Debit scheme? Another requirement is that your company is registered in the commercial register. We also need information from our partner Creditreform, a leading provider of business information in Germany. Your company must therefore be listed here. Before we can offer you this form of Direct Debit, we have to carry out a credit check. We carry this out because we provide you with a form of short-term credit. This is because your customers have the legal right to claim back payments within 8 weeks. We will then step in if this chargeback is not sufficiently covered.

Of course you have to align on a Direct Debit with your customers and other payment partners in advance. With a SEPA Direct Debit mandate, your payment partners authorize you to collect single or recurring Direct Debits from their accounts.

What is a Direct Debit mandate?

Direct Debit mandates are the legal legitimation for the collection of SEPA Direct Debits. The payer consents to the collection of payments by SEPA Direct Debit to the receiver and allows their own payment service provider to debit the payment from their account.

A SEPA Direct Debit mandate must contain the following information:

  • Name of the creditor (receiver of payment)
  • Creditor identifier
  • Name of the customer (payer)
  • Bank of the customer (payer)
  • IBAN of the customer (payer)

At Penta we can offer you Direct Debit up to a maximum of 1.500 € per each single Direct Debit. Depending on your creditworthiness, the total collection limit for all SEPA Core Direct Debits can range from 1,500 € to 40,000 € for a rolling period of 8 weeks. In individual cases it is also possible to have a higher collection limit. Please contact our support team and we will check a manual limit for you.

Setting up the SEPA Core Direct Debit Scheme in Your Penta Account

Let’s get to the exciting part! To enable you to set up SEPA Core Direct Debits at Penta, four steps are necessary:

How do I get my creditor ID?

The creditor identifier is a unique reference number for businesses collecting payments by Direct Debit. It must be provided with each Direct Debit and enables the payer and the bank to verify the Direct Debit. You can apply for your creditor ID at the Deutsche Bundesbank. Please enter your creditor identifier in your Penta account as soon as you are approved for Direct Debit. It will then be added to each Direct Debit automatically.

While you are waiting for your creditor ID, we carry out your credit check. You don’t need to provide us with any further information, because we obtain a credit report from our partner Creditreform. On the basis of the credit check we determine your collection limit.

How the SEPA Core Direct Debit Scheme Works

Once we have granted you the collection limit for your SEPA Core Direct Debits, you can start setting up your first SEPA Core Direct Debit. Log in to your Penta account and navigate to “Direct Debits”. Afterwards, please follow these steps:

  • Make sure that you have a valid Direct Debit mandate from your customer, which includes a signature and the signature date.
  • Click on “Create Direct Debit” and enter information about your customer, such as full name, IBAN, due date, mandate reference, signature date and reason for payment.
  • Then decide whether you would like to create a single or continuous Direct Debits.
  • Once you have successfully created your Direct Debit, you can check the status on your dashboard in the “Direct Debit” menu – “upcoming”, “submitted” and “collected”.
  • At 9 a.m. before the collection date, we transmit the planned Direct Debit so that it can be executed in time.

Please note that your customer has the legal right to request a Direct Debit back up to 8 weeks after payment has been collected – without giving reasons. If the Direct Debit was carried out without a signed mandate, the customer can even reclaim the Direct Debit up to 13 months after the payment has been collected. If the repayment of the Direct Debit has been requested, we will initiate the chargeback from your account and transfer the amount back to the payer.

What is a mandate reference?

The mandate reference is a unique code that you create and assign to a Direct Debit mandate. The mandate reference is displayed to the payer when a Direct Debit is debited. Together with the creditor identification number, it enables the payer to clearly assign your Direct Debit mandate.

The Differences Between SEPA Core Direct Debits and SEPA B2B Direct Debits

We are very pleased to be able to offer you SEPA Core Direct Debits from now on. However, there is also a second form of a Direct Debit scheme that is specially developed to meet the needs of companies. SEPA Business to Business Direct Debits and SEPA Core Direct Debits both have the purpose of collecting money from payment partners, but there are some important differences.

The SEPA Business to Business Direct Debit is limited to payment transactions between companies via their business accounts. Consumers are excluded from this Direct Debit scheme. In the case of SEPA Business to Business Direct Debits, the payer doesn’t have the option of having chargebacks executed, assuming the SEPA Direct Debit mandate has been correctly authorized and is valid. Otherwise, the payer has a period of 13 months to request the money back.

In contrast to the SEPA Core Direct Debit, the payer’s bank checks the SEPA B2B Direct Debit and the data of the Direct Debit mandate before execution. Therefore, in the case of a SEPA B2B Direct Debit, the payer must provide their bank with a copy of the mandate. So if you want to authorize a business partner to collect a Direct Debit from your Penta account, you must send us the Direct Debit mandate by email.

What You Can Expect Soon at Penta

So now you have the opportunity to register for the SEPA Core Direct Debits. With a few clicks you can set up SEPA Direct Debits and track its status. In the next few weeks we will work on further improvements and extensions so that you will receive automatic notifications for your SEPA Core Direct Debits and can also upload collective debits via an XML file.

On our public product roadmap you can also get an idea of what we are currently working on and what you can expect soon at Penta. You also have the opportunity to suggest what we should develop next. Finally, we want to make sure that business banking provides you with the best possible support on your entrepreneurial path.

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Set up Your Account and Direct Debits now

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