Cash & Liquidity Management
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Pioneering European Direct Debits (SEPA) and Mandate Management

by Begoña Blanco Sánchez, Senior Product Manager, Véronique Steleman, Sales Consultant, and Peter Hardeman, Product Manager, Payments & Cash Management, ING

The European Direct Debits went live in November 2009. Since then, ING has been a pioneer in supporting clients moving from domestic direct debit arrangements in Eurozone countries, particularly in Belgium which was the country ING chose for its pilot project. In this  article, ING outlines how we have addressed some of the opportunities and challenges that corporate clients have experienced, and the solutions that are becoming available to facilitate efficient migration.

Motivation for European Direct Debits migration

Inevitably companies have different reasons for migrating to European Direct Debits. In some cases, clients are creditors who want to take advantage of the non-refundability provision in the European Direct Debits business to business (B2B) scheme. In Belgium, for example, the domestic scheme allows the immediate right to refund if requested by the customer, which adds risk and unpredictability to the creditor. Consequently, there are clear benefits in migrating to the European Direct Debits B2B scheme in this instance.

Another group of companies attracted to European Direct Debits are those who have not used a domestic direct debit scheme in the past, and therefore are implementing European Direct Debits directly without the need to migrate from a legacy scheme. Clearly the experience for these clients is the most straightforward, as there is no need to convert mandates or existing formats.

In addition, there are companies with a pan-European customer base, who have either not been in a position to use direct debits for collections in the past, or who have had to maintain separate collection banks and/or accounts with different conditions in each country. These companies can benefit from harmonised conditions with same-day value in a single account under the European Direct Debits scheme. Consequently, European Direct Debits presents a significant opportunity to automate, accelerate and harmonise the collections process for all customers in the Eurozone, which is a major factor in encouraging companies to implement European Direct Debits, particularly the B2B scheme. 

There are other motivating factors in companies’ decision to migrate to, or implement European Direct Debits. For example, European Direct Debits is based on ISO 20022 XML formats. XML is becoming a company-standard for messaging and integration amongst many of our clients; therefore the ability to leverage XML is considered an important advantage by some companies.