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

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Presentation on theme: "Update Direct Debits. Filip Vandenbroecke Francis De Roeck Information session MOB 22 March 2010."— Presentation transcript:

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

2 2 Information session Febelfin - 11/5/ Core scheme 2.Continuity/migration of DOM80 mandates for SDD 3.B2B scheme 4.Questions ? Appendixes 5.Possible future developments Agenda

3 3 Information session Febelfin - 11/5/ 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 yes 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)

4 4 Information session Febelfin - 11/5/ 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

5 5 Information session Febelfin - 11/5/ 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

6 6 Information session Febelfin - 11/5/ 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.

7 7 Information session Febelfin - 11/5/ Migration of 'old' BE mandates Creditor bank Debtor bank Debtor Creditor X monthly upload Active mandates + BIC + IBAN By Nov 1st, 2009 request for migration download request individual notification of enriched mandates data data of Creditor X

8 8 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

9 9 Information session Febelfin - 11/5/ 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

10 10

11 11 Information session Febelfin - 11/5/ 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

12 12 Information session Febelfin - 11/5/2009 Following information is available on the site Rule books –Core & B2B Implementation guidelines –Core & B2B –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) more info ?

13 13 Information session Febelfin - 11/5/2009 Good to know : Average number of direct debits per citizens (2006)

14 14 Information session Febelfin - 11/5/2009 Questions ? ? ?

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

16 16 Information session Febelfin - 11/5/ PSD & impact on DOM80 1.Core scheme 2.Continuity/migration of DOM80 mandates for SDD 3.B2B scheme 4.Questions ? Appendixes 5.E-mandate 6.Possible future developments Agenda

17 17 Information session Febelfin - 11/5/ PSD versus SEPA Scope of PSD –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

18 18 Information session Febelfin - 11/5/ Comparison DOM 80/ DOM 80 PSD compliant DOM 80 DOM 80- PSD compliant Use local idem Creditor ID given by the NBB idem Format CIRI idem Mandate yes idem Storage of the mandate Debtor Bank Creditor ( DOM 70) idem Mandate reference given by the Debtor bank idem Type of DD recurrents idem Pre-notification yes (in practice ?) yes cut-off times D-1 idem Unpaids D+4 D+3 Refunds 4 days 8 weeks (authorised tr) 13 months (Dom70) (unauthorised)

19 19 Information session Febelfin - 11/5/ I mpact of the PSD on DOM 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 5.The pre-notification ( the debtor has to be advised before the debit) 6.The execution time: D+3 (instead of D+4) Application 01/04/2010

20 20 Information session Febelfin - 11/5/ 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 yes 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)

21 21 Information session Febelfin - 11/5/ The customer receives a contract / an invoice and a mandate form from his provider 1. The customer buys a service / a good from the provider Contract / Invoice Reference : Provider’s name : subscription Magazine ABC Amount : 57,23 € Payment by : European Direct Debit Contract / Invoice Reference : Provider’s name : subscription Magazine ABC Amount : 57,23 € Payment by : European Direct Debit Mandate + 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 The customer The buyer The debtor The provider The seller The creditor 1. Core scheme : Process for the mandate 5. The creditor updates his administration and archives the mandate.

22 22 Information session Febelfin - 11/5/ Core scheme : Process for the payment (1) 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 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 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

23 23 Information session Febelfin - 11/5/ Core scheme : Process for the payment (2) Creditor’s bank Clearing Settlement 4. The debtor’s bank debits the account of the debtor 3. The creditor’s bank sends the collections + MRI to the debtor’s bank 5. The debtor’s bank pays the creditor’s bank 2. The creditor sends the collections with the Mandate Related Information (MRI) to his bank Debtor’s bank Debtor Creditor 6. The creditor’s account is credited

24 24 Information session Febelfin - 11/5/ Core scheme : Exception handling & The R messages (1)

25 25 Information session Febelfin - 11/5/2009 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 1. Core scheme : Exception handling & The R messages

26 26 Information session Febelfin - 11/5/2009 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. 1. Core scheme : Exception handling & The R messages

27 27 Information session Febelfin - 11/5/ 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

28 28 Information session Febelfin - 11/5/ 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

29 29 Information session Febelfin - 11/5/2009 Creditor Identifier in Belgium BE BE DZZZ BE When Creditor has an Enterprise nb: –8 17 : Enterprise number (10 pos.) –This ID remains the same, whatever bank is that delivers it 2.When Creditor has no Enterprise nb: –8 10 : Creditor Bank Code (3 pos.) ING=300 –11 : “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

30 30 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

31 31 Information session Febelfin - 11/5/2009 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 Collection initiation files rule

32 32 Information session Febelfin - 11/5/ 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.

33 33 Information session Febelfin - 11/5/ Migration of 'old' BE mandates Creditor bank Debtor bank Debtor Creditor X monthly upload Active mandates + BIC + IBAN By Nov 1st, 2009 request for migration download request individual notification of enriched mandates data data of Creditor X

34 34 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

35 35 Information session Febelfin - 11/5/ 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

36 36 Information session Febelfin - 11/5/ The customer receives a contract / an invoice and a mandate form from his provider 1. The customer and the provider negotiate a commercial transaction Contract / Invoice Reference : Provider’s name : subscription Magazine ABC Amount : 57,23 € Payment by : European Direct Debit Contract / Invoice Reference : Provider’s name : subscription Magazine ABC Amount : 57,23 € Payment by : European Direct Debit Mandate + 3. If the debtor chooses the European Direct Debit as payment instrument, the mandate form is to be filled & signed The customer The buyer The debtor The provider The seller The creditor 3. B2B : Process for the mandate 4A. The debtor sends the filled and signed mandate to the creditor 5. The creditor updates his administrat ion and archives the mandate. Debtor’s bank 4B. The debtor informs his Bank about the signed mandate Additional step for B2B :

37 37 Information session Febelfin - 11/5/ B2B : Process for the payment Creditor’s bank Clearing Settlement 4B. The debtor’s bank debits the account of the debtor 3. The creditor’s bank sends the collections + MRI to the debtor’s bank 5. The debtor’s bank pays the creditor’s bank 2. The creditor sends the collections with the Mandate Related Information (MRI) to his bank Debtor’s bank Debtor Creditor 6. The creditor’s account is credited 1. The provider sends to the debtor a pre advice at least 14 days before the due date. Additional step for B2B : 4A. The debtor’s bank checks the agreement of the debtor

38 38 Information session Febelfin - 11/5/2009 Return (Deb Bk) Refusal (Debitor)  reject 3. Exception handling & The R messages – B2B D+5 collection sent 1) to CSM 2) to Deb bank Creditor sends Collection to his bank D+2 dd D D+2 D-1D-14 Due date Settlement date Debit date Pre- notification Specific for B2B : - Shorter timelines - No Refund Limit to send collection 1) to CSM 2) to Deb bank Time line for the B2B scheme :

39 39 Information session Febelfin - 11/5/ 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

40 40 Information session Febelfin - 11/5/2009 Following information is available on the site Rule books –Core & B2B Implementation guidelines –Core & B2B –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) more info ?

41 41 Information session Febelfin - 11/5/2009 Good to know : Average number of direct debits per citizens (2006)

42 42 Information session Febelfin - 11/5/2009 Questions ? ? ?

43 43 Information session Febelfin - 11/5/ 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)

44 44 Information session Febelfin - 11/5/ 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

45 45 Information session Febelfin - 11/5/ SDD e-Mandate Diagram of the 4 party model 1.Initiation 2 &3 Mandate request Authorisation 4.Confirmation 6 &7 E-Mandate 8Confirmation

46 46 Information session Febelfin - 11/5/2009 Scheme ‘fixed amount’ – (no refund) Mandates via Zoomit MRI before first collection 5. Other possible developments

47 47 Information session Febelfin - 11/5/2009 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 Other possible developments scheme ‘fixed amount’ – no refund

48 48 Information session Febelfin - 11/5/2009 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 5.2. Other possible developments : mandates via Zoomit

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

50 50 Information session Febelfin - 11/5/2009 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 5.3. Other possible developments : MRI before first collection

51 51 Information session Febelfin - 11/5/ The customer receives a contract / an invoice and a mandate form from his provider 1. The customer buys a service / a good from the provider Contract / Invoice Reference : Provider’s name : subscription Magazine ABC Amount : 57,23 € Payment by : European Direct Debit Contract / Invoice Reference : Provider’s name : subscription Magazine ABC Amount : 57,23 € Payment by : European Direct Debit Mandate + 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 The customer The buyer The debtor The provider The seller The creditor 5.3. MRI before first collection : same first steps in the process for the mandate … 5. The creditor updates his administration and archives the mandate.

52 52 Information session Febelfin - 11/5/ MRI before first collection : additional steps before the first collection. Creditor’s bank CSM 10. The debtor’s bank can inform the debtor, can propose additional controls, etc. 7. The creditor’s bank sends the MRI to the debtor’s bank 9. The debtor’s bank sends a R message if relevant 6. The creditor sends the Mandate Related Information (MRI) to his bank Debtor’s bank Debtor Creditor 11. The creditor receives the R messages 8. The debtor’s bank checks that the account is eligible (account valid; open and not blocked for SDD’s


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