The new software supplier sends a form along with the quote: fill in your IBAN, sign, and the monthly fees will be debited automatically from then on. That form is a SEPA mandate (SEPA-machtiging). It is a small document, but it decides who may take money from the account, how often and on what terms. Anyone who reads it carefully also knows how it stops.
Below is what a SEPA mandate is, which details it must contain and the difference between one-off and recurrent. After that come digital mandates, the business mandate and every way to withdraw or limit a mandate.
In short:
- What is a SEPA mandate? The permission, in writing or digitally, that lets an organisation automatically collect amounts from a payment account, one-off or recurrent.
- With the standard European direct debit, a debit can be refunded within 8 weeks without giving a reason. With the business European direct debit that is not possible, and the mandate must also be registered with your own bank.
- You withdraw a mandate with the creditor. If the creditor still keeps collecting, the bank can block direct debits.
- Under the rules of the European Payments Council, the creditor must cancel a mandate if no collection has been presented under it for 36 months.
What is a SEPA mandate?
With the European direct debit, SEPA Direct Debit, an organisation, the creditor (incassant), can automatically collect amounts from a customer’s payment account with the customer’s permission. That permission is the mandate, and according to Betaalvereniging Nederland (the Dutch payments association) it can be given in writing or digitally. The ACM (the Dutch consumer and markets authority) puts it from the payer’s side: a company may not simply debit money from an account; permission is needed in advance, for example via a form or a reply card.
A SEPA direct debit mandate therefore governs the relationship between three parties: the payer, the creditor and the banks of both. The European SEPA Regulation, Regulation (EU) No 260/2012, lays the basis: the creditor, or a third party on its behalf, keeps the mandate, together with later amendments or its cancellation. And anyone who has consented to a series of payments can withdraw that consent at any time under the Dutch Civil Code. From that moment on, later debits count as not authorised.
Who keeps the mandate
The mandate is not held by the payer’s bank but by the creditor. The creditor must record it fully and correctly and keep it carefully, says Betaalvereniging Nederland. Under the EPC rules the creditor keeps the mandate for as long as it exists. A large bank tells its creditors to keep each mandate until 14 months after the last collection. For the payer, an own copy is handy: if there is doubt about a debit, it shows straight away what exactly was agreed.
What does a SEPA mandate form contain?
A SEPA mandate form looks different with every creditor, but its content is fixed in the rules of the European Payments Council. Under those rules the mandate’s heading contains the word SEPA, and every mandate form for a direct debit includes these details:
| Detail | What it is |
|---|---|
| Creditor name and address | Company name, street, postcode, city and country |
| Creditor ID (incassant-ID) | The identifier by which the creditor is recognisable throughout the SEPA area |
| Mandate reference | A unique reference the creditor gives to this one mandate |
| Name of the payer | The name of the account holder giving permission |
| Address of the payer | Postcode, city and country |
| IBAN of the payer | The account that is debited |
| Type of direct debit | One-off or recurrent |
| Place and date | Where and when the mandate was signed |
| Signature | On paper or via a recognised digital route |
The form also carries a consent text: the sentence with which the payer authorises the creditor and their own bank to collect from the account. For the business direct debit, it also states that a refund is not possible. That way it is clear to both sides which kind of direct debit is being agreed.
Creditor ID and mandate reference
A creditor gets the creditor ID when concluding a direct debit contract with its own bank. With that ID the creditor is recognisable in a uniform way throughout the SEPA area, and it is stated with every collection. The creditor assigns the mandate reference itself. It must be unique in combination with the creditor ID and, according to the form of a large bank, may be at most 35 positions long.
Together, creditor ID and reference form the unique reference of the mandate. The creditor ID and mandate reference travel with every collection, so it can be traced which mandate a collection was made under. Anyone who wants to have a mandate blocked or ask about it can use those two details.
In summary: a mandate form names the creditor’s name and address, the creditor ID, the reference, the payer’s name, address and IBAN, the type of direct debit and place, date and signature. ID and reference together make the mandate unique.
One-off or recurrent mandate
A mandate applies to one collection or to a series. With a one-off mandate, the creditor may debit an amount once, for example for a purchase or a registration. A recurrent mandate for a SEPA direct debit goes with a recurring payment: a subscription, rent, a membership fee or a regular supplier.
Betaalvereniging Nederland uses the so-called traffic-light cards for this. The green card is for actually giving the mandate, one-off or recurrent. The yellow card explains how a debit can be reversed unconditionally up to 56 days after it was made. With the red card, filled in and signed, a previously given recurrent mandate can be withdrawn permanently. Anyone giving a recurrent mandate knows in advance, with the red card, how it stops again.
Digital mandates
A mandate does not have to be on paper. According to Betaalvereniging Nederland, Dutch banks offer three ways to give a mandate that meet the SEPA rules: a signed paper form, Digitaal Incassomachtigen (the banks’ digital mandate service), recognisable by its own logo, and a digital form signed with iDIN Ondertekenen. With Digitaal Incassomachtigen the bank records the permission transparently, and it is easy to withdraw later.
With other online permission, without recognised digital approval, broader protection applies. Consumers can then have a related debit reversed for 13 months through a report of an unjustified direct debit (Melding Onterechte Incasso). For anyone collecting themselves, that is the reason to work with a recognised route: a digital mandate that counts as legally valid, just like the paper version.
Business SEPA mandate
Besides the standard European direct debit there is the business European direct debit, internationally Business-to-Business. It is only meant for direct debits between companies and institutions. Under the rules of the European Payments Council, only non-consumers have access to it as payers. The big difference with the standard direct debit: a refund without giving a reason (storneren) is not possible.
That is why a business direct debit mandate comes with an extra step. The payer must also register the mandate with their own bank before debits can take place. The payer’s bank then checks every business collection against the registered details. Without that registration, the bank does not debit the business collection. For a company giving such a mandate, it is sensible to arrange the registration straight away and to compare the amount and frequency with the agreements.
With business Digitaal Incassomachtigen, giving the mandate and registering it with the bank happen automatically and at the same time. Anyone who gives the mandate on paper and forgets the registration will see the supplier’s first collection rejected, and that is the signal to still report the mandate to the bank.
Withdrawing or limiting a SEPA mandate
You withdraw a SEPA mandate with the creditor. Withdrawing a mandate tells the creditor that the permission for future debits ends; the red traffic-light card is a standard form for that. If the creditor still keeps collecting afterwards, the bank can block the account for direct debits from that creditor. Betaalvereniging Nederland also names a series of ways to limit direct debits:
Each bank decides for itself how it offers these measures, for example in the app, via online banking or by phone. Anyone working with an approval list must add the creditor to the list themselves with every new mandate. Otherwise the creditor cannot debit the money, even if the mandate is otherwise correct.
Good to know: a mandate has no fixed term. If the creditor presents no collection for 36 months, it must cancel the mandate under the EPC rules; after that a new mandate is needed.
Collecting direct debits as an entrepreneur
Anyone who wants to collect direct debits themselves, for example for subscriptions or regular clients, concludes a direct debit contract with their own bank and receives a creditor ID. Betaalvereniging Nederland gives creditors a few standard pieces of advice. Use mandates that hold up against a report of an unjustified direct debit: on paper with a handwritten signature, via Digitaal Incassomachtigen or with a form signed digitally with iDIN Ondertekenen. And record mandates fully and correctly.
Even with a good mandate, a collection sometimes cannot go through. According to Betaalvereniging Nederland, banks offer their customers nine ways to limit or block direct debits, including the six above, such as a maximum amount or an approval list. A creditor who knows this first asks, after a failed collection, whether the customer has set a limit, before sending a reminder.
Giving a SEPA mandate in 4 steps
Anyone who receives a SEPA mandate form goes through it in this order:
Check that the creditor’s name matches the supplier and that the form contains a creditor ID and a mandate reference.
See which type of direct debit is requested. A recurrent mandate goes with a fixed arrangement, such as a subscription; for a single purchase, one-off is enough.
Sign on paper or use a recognised digital route, such as Digitaal Incassomachtigen. For a business direct debit, the registration with your own bank follows.
Keep a copy of the mandate with the records and compare the first debit with the arrangement: amount, reference and date.
Paying direct debits with Vivid
With a Vivid business account with a Dutch IBAN, you can pay SEPA direct debits. For a scheduled direct debit, Vivid reserves the amount on the account one business day before the collection date, so the money is ready at the moment of debiting.
When switching via Qwist GmbH, Qwist informs the creditors about the new account. Anyone switching also keeps their own list of mandates, so it is clear which direct debits are running.
Vivid in short: paying direct debits from a business account with a Dutch IBAN, with the amount reserved one business day in advance. Existing direct debits can be switched free of charge.
Switching direct debits to Vivid
A business account with a Dutch IBAN, to which you switch existing direct debits free of charge. The application is fully online.
Frequently asked questions
What is a SEPA mandate?
The permission, in writing or digitally, that lets an organisation automatically collect amounts from a payment account. A mandate for a direct debit can be one-off or recurrent. The creditor keeps the mandate.
What must a mandate form contain?
The creditor’s name and address, the creditor ID, the mandate reference, the payer’s name, address and IBAN, the type of direct debit (one-off or recurrent), place and date and a signature. In addition, a consent text with which the payer authorises the creditor and their own bank.
What is a creditor ID?
The identifier a creditor receives from the bank with a direct debit contract. It makes the creditor recognisable throughout the SEPA area. Together with the mandate reference it forms the unique reference of the mandate.
How do you withdraw a SEPA mandate?
With the creditor, for example with the red traffic-light card. A single direct debit can be revoked up to the end of the business day before the debit. If the creditor still keeps collecting, the bank can block the account for direct debits from that creditor. Under the Dutch Civil Code, consent to a series of payments can be withdrawn at any time.
How long does a mandate stay valid?
A recurrent mandate stays valid until it is withdrawn. If the creditor presents no collection for 36 months, it must cancel the mandate under the rules of the European Payments Council.
What is a business mandate?
A mandate for the business European direct debit, for non-consumers only. The payer registers the mandate with their own bank, and a refund without giving a reason is not possible. The bank checks every business collection against the registered details.
Can you get a direct debit refunded?
With the standard European direct debit, within 8 weeks after the debit, without giving a reason. If the direct debit is unjustified, a period of 13 months applies according to the ACM. With the business direct debit, a refund is not possible.
This article provides general information and is not legal or financial advice. The rules mentioned are as published by Betaalvereniging Nederland, the European Payments Council, the ACM, in Regulation (EU) No 260/2012 and the Dutch Civil Code, and may change. Vivid’s payment services are provided by Vivid Money S.A., an electronic money institution authorised and regulated by the Commission de Surveillance du Secteur Financier (CSSF) in Luxembourg; its Dutch branch is registered with De Nederlandsche Bank (DNB) as an electronic money institution. Brand names mentioned belong to their respective owners.
