Filip Vandenbroecke Francis De Roeck

Filip Vandenbroecke Francis De Roeck
Update Direct Debits. Information session MOB 22 March 2010 Filip Vandenbroecke Francis De Roeck

Agenda Core scheme Continuity/migration of DOM80 mandates for SDD
B2B scheme Questions ? Appendixes Possible future developments Information session Febelfin - 11/5/2009

1. SDD Core scheme : Comparison with DOM 80(Post 1/4/2010)
DOM 80- PSD compliant SEPA Direct Debits Use local local & cross-border Creditor ID given by the NBB given by the Creditor bank Format CIRI XML format Mandate yes Storage of the mandate Debtor Bank Creditor ( DOM 70) Creditor Mandate reference given by the Debtor bank given by the creditor Type of DD recurrents one-off’s and recurrents Pre-notification cut-off times D-1 D-5 / D-2 Unpaids D+3 D+5 Refunds 8 weeks 13 months 8 weeks (authorised trx) 13 months (unauthorised) Information session Febelfin - 11/5/2009

1. Core scheme : Consequences for the Debtor
Mandate managed by the Creditor The debtor will send his mandate to the creditor (and not to his bank) The debtor bank can offer specific services to the debtor (visualization of mandates, controls…) Transparency The debtor is well informed by the creditor about the collection Good information about the product, rights, … from his bank Good protection Easy process for refund Belgian end European invoices Recurrent and one-off invoices Information session Febelfin - 11/5/2009

1. Core scheme : Consequences for the Creditor
Mandate managed by the creditor The debtor will send his mandate to the creditor The creditor is responsible for dematerialisation & archiving New process and timelines New roles & responsibilities New contracts Same refund period as for DOM80(post PSD). New formats between the customer and the bank : IBAN/BIC XML Standard for Collections & Reversals (will be published in April) Full automated processing : End-to-end carrying of customer remittance data with a unique reference Ability to automate exceptions handlings like rejects, refunds, … Ultimate debtor and creditor Belgian and European invoices Recurrent and one-off collections Later extension to : E-signature & Business-to-Business Information session Febelfin - 11/5/2009

1. Core scheme : first experiences
Some creditors started Only with new mandates No major issue new elements for Belgian Creditors Mandate management XML formats Limited volumes so far As from 1/4/2010 : possibility to issue SDD(core) collections based on ‘migrated’ DOM80 mandates. Migration to Isabel 6. Information session Febelfin - 11/5/2009

2. Migration of 'old' BE mandates
Debtor bank Debtor By Nov 1st, 2009 individual notification of enriched mandates data monthly upload Active mandates + BIC + IBAN download request data of Creditor X Creditor bank Additional info : When a creditor has finished his migration, The creditor bank will fill a form and send it to the BNB this will be mentioned in the credom file A XLS file with the migrated creditors will be made available. Creditor X request for migration Information session Febelfin - 11/5/2009

Direct Debits Migration of existing Belgian mandates
Belgian banks decided to limit the impact (for creditors & debtors) by enabling the continuity of the 30 millions existing mandates Procedure : Debtor Bank will upload to the NBB the electronic datas about the DOM80 mandates of their customers (debtors) with IBAN/BIC The NBB will store all mandate information in a central database The Creditor can ask to his bank a file will all mandates in his favor The Creditor Bank will then ask the download to the NBB which will send the file to the Creditor Debtor Banks have to keep the archived mandates Mandates migrated are only Core scheme mandates, for B2B mandates, a new signature is needed Information session Febelfin - 11/5/2009

3. B2B (Business to Business) scheme
Major differences versus the core scheme: Specific mandate. No refund Eligible debtors : only ‘business’. Concrete criteria left to debtor banks Confirmation of consent by debtor to his bank required. Shorter timelines D-1 for presentations D+2 for returns No Migration of DOM80 mandates into B2B mandates. Only new mandates The B2B scheme is optional for Banks (for the Core scheme, each bank must participate as debtor bank). but 12 banks are already operational in Belgium Information session Febelfin - 11/5/2009

3. B2B scheme : first experiences
Some creditors started Major attention points Too many collections returned due to lack of consent available at the level of the debtor’s bank Ask your debtor to confirm to his bank about his consent (f.i. copy of the mandate) Eligibility of debtors This can not be imposed to debtor banks (optional scheme). Ask your debtor to contact his bank Information session Febelfin - 11/5/2009

more info ? Following information is available on the site Rule books Core & B2B Implementation guidelines bank to bank Customer to bank (Unifi 20022) Bank to Customer (CODA 2) Brochure SEPA DD (Febelfin) Migration of DOM80 mandates to core scheme mandates Migration procedure for banks (debtor banks & creditor banks) Migration contract for banks (debtor banks & creditor banks) (soon available) Information session Febelfin - 11/5/2009

Good to know : Average number of direct debits per citizens (2006)
Information session Febelfin - 11/5/2009

Questions ? ? ? Information session Febelfin - 11/5/2009

Update Direct Debits. full version
Information session MOB 22 March 2010 Filip Vandenbroecke Francis De Roeck

Agenda 0. PSD & impact on DOM80 Core scheme
Continuity/migration of DOM80 mandates for SDD B2B scheme Questions ? Appendixes E-mandate Possible future developments Information session Febelfin - 11/5/2009

0. PSD versus SEPA Scope of PSD Scope of SEPA
Covers all forms of electronic payments, including: Cash to bank (deposits) Out of scope: Pure cash payments (cash to cash) Cheques, bills of exchange etc. Geographic area is EU – 27 countries EEA – 3 countries Covers transactions in all EU currencies – 15 currencies (incl. EEA currencies) Bank to customer Law, hence: Mandatory Scope of SEPA Applies to limited number of payments: credit transfers cards direct debits Geographic area is EU 27 + EEA + CH Covers only transactions in Euro! Interbank area Voluntary adherence Information session Febelfin - 11/5/2009

0.Comparison DOM 80/ DOM 80 PSD compliant
Use local idem Creditor ID given by the NBB Format CIRI Mandate yes Storage of the mandate Debtor Bank Creditor ( DOM 70) Mandate reference given by the Debtor bank Type of DD recurrents Pre-notification yes (in practice ?) cut-off times D-1 Unpaids D+4 D+3 Refunds 4 days 8 weeks (authorised tr) 13 months (Dom70) (unauthorised) Information session Febelfin - 11/5/2009

0. Impact of the PSD on DOM 80 1. Refund period needs to be integrated
- 8 weeks for authorised transactions: unconditional refund (DOM 70/80) - 13 months for unauthorised transactions (DOM 70) 2. Value date = Book date 3. New contract to be PSD compliant 4. The existing mandate forms can still be used but need to give an explicit reference to the underlying contract The pre-notification ( the debtor has to be advised before the debit) The execution time: D+3 (instead of D+4) Application 01/04/2010 Information session Febelfin - 11/5/2009

1. SDD Core scheme : Comparison with DOM 80(Post 1/4/2010)
DOM 80- PSD compliant SEPA Direct Debits Use local local & cross-border Creditor ID given by the NBB given by the Creditor bank Format CIRI XML format Mandate yes Storage of the mandate Debtor Bank Creditor ( DOM 70) Creditor Mandate reference given by the Debtor bank given by the creditor Type of DD recurrents one-off’s and recurrents Pre-notification cut-off times D-1 D-5 / D-2 Unpaids D+3 D+5 Refunds 8 weeks 13 months 8 weeks (authorised trx) 13 months (unauthorised) Information session Febelfin - 11/5/2009

1. Core scheme : Process for the mandate
The provider The seller The creditor 1. The customer buys a service / a good from the provider The customer The buyer The debtor 3. If the debtor chooses the European Direct Debit as payment instrument, he fills & signs the mandate form 4. He sends it to the creditor 2. The customer receives a contract / an invoice and a mandate form from his provider 5. The creditor updates his administration and archives the mandate. Contract / Invoice Reference : Provider’s name : subscription Magazine ABC Amount : 57,23 € Payment by : European Direct Debit Mandate + Information session Febelfin - 11/5/2009

1. Core scheme : Process for the payment (1)
1. The provider sends to the debtor a pre advice at least 14 days before the due date. Pre-notification Mandate reference : Name of the supplier : Subscription Magazine ABC Amount : 57,23 euros Payment date : every year 15th of January First payment : 15th of January 2009 The creditor can send the pre-notification separately or can join it to a statement or an invoice. An overview or a plan for several collections is also acceptable The creditor & the debtor can agree about another timing for the pre-notification Information session Febelfin - 11/5/2009

1. Core scheme : Process for the payment (2)
Creditor Debtor 2. The creditor sends the collections with the Mandate Related Information (MRI) to his bank 6. The creditor’s account is credited 4. The debtor’s bank debits the account of the debtor Creditor’s bank 3. The creditor’s bank sends the collections + MRI to the debtor’s bank Debtor’s bank Clearing Settlement 5. The debtor’s bank pays the creditor’s bank Information session Febelfin - 11/5/2009

1. Core scheme : Exception handling & The R messages (1)

1. Core scheme : Exception handling & The R messages
Reject: is DD collection that is diverted from normal execution prior to inter-bank settlement by the Creditor Bank, CSM or Debtor Bank (invalid format, wrong IBAN, check digit, refusal by the debtor, …) Refusal: is a claim initiated by the Debtor before settlement for any reason, requesting the Debtor Bank not to pay a DD collection (the Debtor bank will then generate a reject) Return: is DD collection that is diverted from normal execution after inter-bank settlement and is initiated by the Debtor Bank within 5 target days. (insufficient balance on the account, …) Refund: is a claim by the Debtor for a reimbursement of an already settled DD Information session Febelfin - 11/5/2009

1. Core scheme : Exception handling & The R messages
Revocation: is requested by the Creditor to recall the instruction for a DD collection prior to the acceptance by the Creditor Bank. Request for cancellation: is requested by the Creditor Bank to recall the instruction for a DD collection prior to acceptance by the CSM Reversal: when the Creditor concludes that a DD collection should not have been processed after the Clearing and Settlement and reimburses the Debtor with the full amount of the erroneous collection within 2 days after settlement. Can be initiated by Creditor Bank for the same reasons. Information session Febelfin - 11/5/2009

1. Core scheme : Consequences for the Debtor
Mandate managed by the Creditor The debtor will send his mandate to the creditor (and not to his bank) The debtor bank can offer specific services to the debtor (visualization of mandates, controls…) Transparency The debtor is well informed by the creditor about the collection Good information about the product, rights, … from his bank Good protection Easy process for refund Belgian end European invoices Recurrent and one-off invoices Information session Febelfin - 11/5/2009

1. Core scheme : Consequences for the Creditor
Mandate managed by the creditor The debtor will send his mandate to the creditor The creditor is responsible for dematerialisation & archiving New process and timelines New roles & responsibilities New contracts Same refund period as for DOM80(post PSD). New formats between the customer and the bank : IBAN/BIC XML Standard for Collections & Reversals (will be published in April) Full automated processing : End-to-end carrying of customer remittance data with a unique reference Ability to automate exceptions handlings like rejects, refunds, … Ultimate debtor and creditor Belgian and European invoices Recurrent and one-off collections Later extension to : E-signature & Business-to-Business Information session Febelfin - 11/5/2009

Creditor Identifier in Belgium
When Creditor has an Enterprise nb: 8 17 : Enterprise number (10 pos.) This ID remains the same, whatever bank is that delivers it When Creditor has no Enterprise nb: 8 10 : Creditor Bank Code (3 pos.) ING=300 : “D” 12 20: Sequential Number (9 pos.) Remark: The dom80 IDs that begin with 4 or more zeros may not be used Creditor Bank obligations: Issue the Creditor Identifier (AT-02) Issue the unique sequential nb when no enterprise nb exists Deliver Creditor Identification issuance certificates when requested BE 98 001 BE 98 300 D ZZZ BE 98 001 Information session Febelfin - 11/5/2009

Informing creditors of the reason of an R-transaction via CODA (4)
The bank of the creditor Maps the SDD reason codes received into CODA reason codes Differentiates between 4 code groups CODA reason 1 : maps codes indicating technical problems Codes MD02, MD03, AG02, RC01, AM05 CODA reason 2 : maps codes indicating other/unknown reason Codes AM04, MS03 CODA reason 3 : maps codes indicating explicit disagreement by the debtor Codes MD01,MD06 and MS02 CODA reason 4 :maps codes indicating account problems Codes AC01, AC04,AC06, AG01,BE01,MD07, RR01,SL01 Information session Febelfin - 11/5/2009

Collection initiation files
One set of signatures Each DD batch: Same due date Can not mix Sequence Type: First (D-5) Recurrent (D-2) Final (D-2) One-off (D-5) Can not mix core with B2B Can mix different timelines in same Seq Type Recurrent normal (D-2) with Bank Changed (D-5) = when Debtor goes to another bank & decides to keep the same mandate Individual procuration check (for NL) Different batch in file when Different due date Different scheme (core vs B2B) Different sequence type rule Information session Febelfin - 11/5/2009

1. Core scheme : first experiences
Some creditors started Only with new mandates No major issue new elements for Belgian Creditors Mandate management XML formats Limited volumes so far As from 1/4/2010 : possibility to issue SDD(core) collections based on ‘migrated’ DOM80 mandates. Migration to Isabel 6. Information session Febelfin - 11/5/2009

2. Migration of 'old' BE mandates
Debtor bank Debtor By Nov 1st, 2009 individual notification of enriched mandates data monthly upload Active mandates + BIC + IBAN download request data of Creditor X Creditor bank Additional info : When a creditor has finished his migration, The creditor bank will fill a form and send it to the BNB this will be mentioned in the credom file A XLS file with the migrated creditors will be made available. Creditor X request for migration Information session Febelfin - 11/5/2009

Direct Debits Migration of existing Belgian mandates
Belgian banks decided to limit the impact (for creditors & debtors) by enabling the continuity of the 30 millions existing mandates Procedure : Debtor Bank will upload to the NBB the electronic datas about the DOM80 mandates of their customers (debtors) with IBAN/BIC The NBB will store all mandate information in a central database The Creditor can ask to his bank a file will all mandates in his favor The Creditor Bank will then ask the download to the NBB which will send the file to the Creditor Debtor Banks have to keep the archived mandates Mandates migrated are only Core scheme mandates, for B2B mandates, a new signature is needed Information session Febelfin - 11/5/2009

3. B2B (Business to Business) scheme
Major differences versus the core scheme: Specific mandate. No refund Eligible debtors : only ‘business’. Concrete criteria left to debtor banks Confirmation of consent by debtor to his bank required. Shorter timelines D-1 for presentations D+2 for returns No Migration of DOM80 mandates into B2B mandates. Only new mandates The B2B scheme is optional for Banks (for the Core scheme, each bank must participate as debtor bank). but 12 banks are already operational in Belgium Information session Febelfin - 11/5/2009

3. B2B : Process for the mandate
1. The customer and the provider negotiate a commercial transaction The provider The seller The creditor The customer The buyer The debtor 4A. The debtor sends the filled and signed mandate to the creditor 3. If the debtor chooses the European Direct Debit as payment instrument, the mandate form is to be filled & signed 5. The creditor updates his administration and archives the mandate. 2. The customer receives a contract / an invoice and a mandate form from his provider Additional step for B2B : Contract / Invoice Reference : Provider’s name : subscription Magazine ABC Amount : 57,23 € Payment by : European Direct Debit 4B. The debtor informs his Bank about the signed mandate Mandate + Debtor’s bank Information session Febelfin - 11/5/2009

3. B2B : Process for the payment
1. The provider sends to the debtor a pre advice at least 14 days before the due date. Creditor Debtor 2. The creditor sends the collections with the Mandate Related Information (MRI) to his bank 6. The creditor’s account is credited 4B. The debtor’s bank debits the account of the debtor Creditor’s bank Debtor’s bank 5. The debtor’s bank pays the creditor’s bank Settlement Additional step for B2B : 4A. The debtor’s bank checks the agreement of the debtor Clearing 3. The creditor’s bank sends the collections + MRI to the debtor’s bank Information session Febelfin - 11/5/2009

3. Exception handling & The R messages – B2B
Time line for the B2B scheme : D-14 D-1 D D+2 D+5 Creditor sends Collection to his bank Pre- notification collection sent 1) to CSM 2) to Deb bank Limit to send collection 1) to CSM 2) to Deb bank Due date Settlement date Debit date Refusal (Debitor)  reject Return (Deb Bk) Specific for B2B : Shorter timelines No Refund Information session Febelfin - 11/5/2009 D+2 dd

3. B2B scheme : first experiences
Some creditors started Major attention points Too many collections returned due to lack of consent available at the level of the debtor’s bank Ask your debtor to confirm to his bank about his consent (f.i. copy of the mandate) Eligibility of debtors This can not be imposed to debtor banks (optional scheme). Ask your debtor to contact his bank Information session Febelfin - 11/5/2009

more info ? Following information is available on the site Rule books Core & B2B Implementation guidelines bank to bank Customer to bank (Unifi 20022) Bank to Customer (CODA 2) Brochure SEPA DD (Febelfin) Migration of DOM80 mandates to core scheme mandates Migration procedure for banks (debtor banks & creditor banks) Migration contract for banks (debtor banks & creditor banks) (soon available) Information session Febelfin - 11/5/2009

Good to know : Average number of direct debits per citizens (2006)

Questions ? ? ? Information session Febelfin - 11/5/2009

4. In the pipeline : E mandates : objectives
Higher security : Validation by the debtor bank of : the correctness of the account and openness for SDD collections the access to the account based on the used identification mean. less refunds for unauthorized collections. Paperless : Faster & easier process Fully automated E2E STP mandate processing One integrated process with the ordering / signing of the contract. The Debtor bank can store the MRI at that time Instead of based on the MRI sent with the first collection To improve its offering for visualisation / additional controls Dependencies : Documentation & standardisation (ISO) Offering of routing & validation services Facultative; no impact on the collections. Available for both schemes : core & B2B (later) No commitment yet on Belgian level. (analysis to be done) Information session Febelfin - 11/5/2009

4. SDD e-Mandate Service Description
Successive steps of the issuing process: Step 1: Debtor initiates e-Mandate on Creditor’s Web-Site; checking by Creditor Step 2: Creditor submits e-Mandate proposal through routing service Step 3: to validation service of Debtor Bank Step 4: Debtor Bank invites Debtor to enter authentication means Step 5: Debtor Bank validates Debtor’s means of authentication and confirms to Debtor Step 6: Debtor Bank confirms validation result through the original routing service Step 7: to the Creditor Step 8: Creditor confirms final acceptance to Debtor and stores e-Mandate The collection is processed via the normal standard SDD procedure WHY A VARIANT OF THE SDD SCHEME ? REMINDER: A direct debit product is a way to collect funds. It is a method for payments of bills and making other payments. This method is ideally suited for both one-off and regular but variable payments such as subscriptions or utility bills. The payment is made by your bank to the person or company to whom the payment is due (called the “Creditor”). In order to do that, you have to authorise the creditor to collect the payment from your bank. The Mandate is the authorisation and expression of consent given by you to the Creditor to allow such Creditor to initiate collections. In the STATEMENT OF CONSUMERS’ RIGHTS (Annex III of the SEPA Core Direct Debit Scheme Rulebook Version 3.1), it is foreseen that you may request your bank to refund a payment made if you consider that the amount of the payment is wrong or for any other reason. You must inform your bank no later than 8 weeks after the payment was debited from your account. Your bank is obliged to give you a refund if you make your refund request within the 8 weeks period described above. Because of the above mentioned constrain (i.e. the right for any consumer to obtain an “automatic” refund, during a period of 8 weeks after the debit of his account, regardless his consent given true a valid mandate to debit his account), the business community decided to examine the possibility to develop another Scheme without the said constrain. As providers of services, business customers are generally in the position of Creditors. They decided not to stick to the refund right when they are in the debit side position. Because a business customer is not a consumer, they are authorised by national law to opt out from the refund right. The development of a specific Business to Business Direct Debit Scheme was decided at the March 2006 Plenary after the national consultation of December 2005. Information session Febelfin - 11/5/2009

4. SDD e-Mandate Diagram of the 4 party model
Initiation 2 &3 Mandate request Authorisation Confirmation 6 &7 E-Mandate 8 Confirmation Information session Febelfin - 11/5/2009

5. Other possible developments
Scheme ‘fixed amount’ – (no refund) Mandates via Zoomit MRI before first collection Information session Febelfin - 11/5/2009

5.1. Other possible developments scheme ‘fixed amount’ – no refund
Major characteristics : Specific mandate : the mandate contains the amount of the future collection(s). The debtor renounces explicitly his refund right The periodicity (f.i. one collection per month) is also an option in this scheme Target No eligibility limitations at debtor side. Eligibility at creditor / business side not yet clear. There may be a code of conduct reserving this scheme to the payment of goods & services that by their nature cannot be returned. This scheme will be optional Status Status at EPC level : for validation in the Plenary of 24/3/2010. The Belgian banking community will support this scheme. The timing is not yet discussed nor defined. Information session Febelfin - 11/5/2009

5.2. Other possible developments : mandates via Zoomit
Major characteristics : Possibility for the creditor to submit mandates to the debtor via zoomit Possibility for the debtor to sign the mandate electronically Possibility for the creditor to be sure that the mandate is signed by the owner of the account or his representative Pure Belgian idea – no European solution Status Presented in last MOB; some positive reactions, but limited interest expressed. To be analysed in the context of a joint action plan for the migration Information session Febelfin - 11/5/2009

5.2. Other possible developments : Mandates via Zoomit.
12/04/2017 5.2. Other possible developments : Mandates via Zoomit. IBAN Dr bk 1 Connector Connector Mandate Requests Sender Dr Bk 2 Connector Mandate Requests Encrypted URL to DSP Dr Bk 3 Connector Send signed e-Mandate request Account X Sign e-Mandate request Check e-Mandates Availability Document Service Platform DSP Browser window 1 Internet Banking Connector Browser window 2 49 Information session Febelfin - 11/5/2009

5.3. Other possible developments : MRI before first collection
Major characteristics : Possibility for the creditor to send the Mandate Related Information (MRI) to the debtor bank as soon as the mandate has been signed by the debtor. The debtor bank checks the eligibility : i.e. that the account number is correct, open, and not blocked for Sepa Direct Debits. Possibility for the debtor bank to inform the owner of the account about this MRI; in this case : possibility for the debtor to react if required. (for B2B : Possibility for the debtor bank to submit to the owner of the account this MRI in order to get confirmation of his consent). This Belgian idea has been submitted (once again) to the EPC : Support from major stakeholders (consummers; EACT) Limited support from major banking community. Status Presented in last MOB; some positive reactions. We monitor the development at European level : The belgian banking community is not in favor of local flavours. To be analysed in the context of a joint action plan for the migration Information session Febelfin - 11/5/2009

5.3. MRI before first collection : same first steps in the process for the mandate …
The provider The seller The creditor 1. The customer buys a service / a good from the provider The customer The buyer The debtor 3. If the debtor chooses the European Direct Debit as payment instrument, he fills & signs the mandate form 4. He sends it to the creditor 2. The customer receives a contract / an invoice and a mandate form from his provider 5. The creditor updates his administration and archives the mandate. Contract / Invoice Reference : Provider’s name : subscription Magazine ABC Amount : 57,23 € Payment by : European Direct Debit Mandate + Information session Febelfin - 11/5/2009

5.3. MRI before first collection : additional steps before the first collection.
Creditor Debtor 6. The creditor sends the Mandate Related Information (MRI) to his bank 11. The creditor receives the R messages 10. The debtor’s bank can inform the debtor, can propose additional controls, etc. Creditor’s bank Debtor’s bank 9. The debtor’s bank sends a R message if relevant CSM 8. The debtor’s bank checks that the account is eligible (account valid; open and not blocked for SDD’s 7. The creditor’s bank sends the MRI to the debtor’s bank Information session Febelfin - 11/5/2009

Filip Vandenbroecke Francis De Roeck

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