Direct Debit: Online merchants receive debit authorization
The payment by direct debit counts as the purchase on account to the most popular payment procedures in the online trade. For both customers and online merchants, the direct debit procedure is extremely easy and convenient. In order to be able to make payment by direct debit, customers enter their account data in a form field in the online shop. The selection of the payment by direct debit as well as the entry of the account data is evaluated as debit authorization. The banker then uses the bank account to order his bank to collect the relevant amount. If the merchant bank has notified the collection of the amount to the bank of the customer, the customer bank will issue the appropriate credit, provided no formal aspects prevent it.
Advantages and disadvantages of the direct debit procedure
However, it may prove to be problematic that some customers are concerned about revealing their banking data on the Internet. In addition, the customer does not give a written authorization to make an order on the Internet. In the case of a dispute, online merchants therefore generally have nothing in hand to justify the legality of their entry into the bank. It is true that the costs involved in the direct debit procedure are comparatively low. If, however, the customer’s account is not covered by the customer’s account or has entered incorrect data, the bank of the customer usually asks the bank of the online retailer (the retailer) to issue a so-called „back-up“. In addition, however, an individual reimbursement charge can be agreed between the online dealer and his bank. In order to avoid reimbursement and the associated costs, online merchants should counteract any fraud and credit risks by means of appropriate measures.
Payment by direct debit: What changes with the SEPA conversion
With the expiry of the transitional period for the SEPA conversion on 1 August 2014, the popular direct debiting system is now being replaced by the SEPA direct debiting system. In future, two SEPA direct debits will be co-existing: the B2C area is the basic direct debiting system and the B2B variant is the company variant. A major change introduced by the new SEPA direct debits is the new bank recognition of the customers. The existing account numbers and bank sort codes are replaced by IBAN and BIC. However, since 1 February 2014 the BIC has only to be indicated for cross-border payments. Furthermore, a uniform text must be used for the authorization of the so-called SEPA mandate. Each SEPA mandate also has a mandate reference, To clearly identify the mandate given. Another change is the creditor identification number that each company needs to be able to execute a direct debit. The creditor ID can easily be applied for on the website of the Deutsche Bundesbank. For further information on the SEPA conversion and the SEPA direct debit procedure, please refer to our SEPA guide .