SEPA Direct Debit for SMEs - EU Cross Border

Celtarion

Hi Everyone,

Hope you can help.

I'm currently facing a situation where my bank is telling me that I can't use SEPA Direct Debit because it is used only by large companies that can become direct debit originators.

I'm concerned on the fact that some of my customers are outside of Ireland and they wish ti pay ONLY by SEPA Direct Debit. I thought that was the best way to get the money faster, but for some reason it seems to be complicated.

Having read EU docs and some business website, I don't understand where is the issue with my bank gaving me an access to set up SEPA DD?? I ll have very few transaction per month, but I have to adapt on how my customers wish to pay me.

Any idea on how to proceed? Is there a minimum transaction to make every month??

Thanks!

Tow

Celtarion wrote: »

Any idea on how to proceed? Is there a minimum transaction to make every month??

A)No such rules exist, complain higher up your banks food chain or change banks. The only thing the bank should be concerned about is that you are of good standing and will not run amuck. BTW, are you talking to your local branch? If so, you are much better off talking to the proper section of your bank.

B)No.

BazzaDP

Of course such rules exist. Otherwise anyone could just start taking funds from anyone's accounts! The direct debit scheme (SEPA or the older scheme) is basically based on 1) Trust the originators will not abuse their power and 2) The fact that incorrect direct debits can be reversed if an error occurs. Companies can lose their originator status if they misbehave. To become an originator you need bank sponsorship (http://www.ipso.ie/section/section/BecomingaDirectDebitOriginator).

It sounds like your bank thinks you are too small to be worthwhile for them. There are a few companies that may collect direct debits on your behalf. Perhaps your bank can advise on a recommended one?

Celtarion

Thanks guys for answering.

I understand that there is some rules, it makes sense of course, nobody would like to get collected an amount of their own bank account.

However, do you think that, the reason could be that the company is too young? less than 3 months?

@Tow
Yes it is the local branch.

@BazzaDP
Yeah too small indeed I'd say, but in that case, why opening a business bank account if they can't provide a payment method based on your need eh? Waste of time, I saw that AIB seems to be more in advance for SEPA DD.

I had a look in details at the weblink you have provided, and I see that the Scheme has over 4,000 Originators who process over 100 million direct debits every year. It seems to be designed for large companies only as far as I can see...

I called IPSO to get some advices, it seems to be not good really... Behind this fabulous change for everybody, it is more complicated in the real world than on the paper...

They said that, all companies can become DD originator, however, depends of the rules of the banks... I didn't see any rules clearly explained on any website except AIB who seems to be in advance. So they advised to talk to the department in question rather than the local branch, SEPA Team in particular.

Otherwise, they advised to change for an other bank... Sounds definitely not good at all for the business in Ireland...:-/

Tow

BazzaDP wrote: »

Of course such rules exist.

There is no rule for minimal transactions, apart from the bank not being bothered to set you up. I know of one company which only make one debit a month and several who have two or three.

Jim2007

Tow wrote: »

There is no rule for minimal transactions, apart from the bank not being bothered to set you up. I know of one company which only make one debit a month and several who have two or three.

SEPA rules define how transactions must be processed when a service is offered, but not what services a bank must offer. In many SEPA countries DD is almost unknown and very few banks offer it. I bank here with one of the major Swiss banks, but setting up a DD is impossible because the bank does not offer that service.

murphaph

Yeah, getting an originator ID varies in each country as well. Here in Germany you apply directly to the Deutsche Bundesbank for one and getting it is a formality as direct debit is very common here, especially for paying rent.

@Jim, do you mean you can't be an originator or you can't even have your electricity/gas etc. drawn by direct debit from your account? Is direct debit just not common in CH? If not, do you have to manually pay the bills that vary each month (I presume your phone bill can vary, while your electricity/gas are constant with a differential payment once a year as it is in Germany?)

Celtarion

Guys, don't mix up Business and individuals as they are different processes.

After sending EU docs to my bank and different weblinks, they finally gave me a phone number in order to become a SEPA DD Originator!! I'll call Tuesday next and see the story from there.

Jim2007

murphaph wrote: »

@Jim, do you mean you can't be an originator or you can't even have your electricity/gas etc. drawn by direct debit from your account? Is direct debit just not common in CH? If not, do you have to manually pay the bills that vary each month (I presume your phone bill can vary, while your electricity/gas are constant with a differential payment once a year as it is in Germany?)

It is very hard to get a Swiss to agree to anyone taking random sums of money out of their accounts

You either set up a standing order for regular payments or pay bills as they arrive in the post or via eBill. With eBill you tell vendors to send bills to your IBAN and when you logon to your account you are presented with a list of bills that are outstanding and you decide how to deal with them.

The only exception are credit card bills which are normally debited to your account in full each month. For us the credit bit is the period between when you buy and when you pay at the end of the month

Celtarion

After several emails sent to my bank advisor, she advised that they can't and came back with something new, the bank account has less than 6 months activity so they refuse to give me the access to Originator DD.

I asked her to escalade my request to a Senior Manager, in less than 2 hours, they refused again. As far as I can see, the only way to do some business following the type of customer I have is by Direct Debit, in this case it means that I can't get paid from my customers, so no payment, no activity, no company.

The new EU SEPA regulation has introduced a better way to make some business outside of Ireland, but in the real world, it is not feasible at all.

An other thing is that, following what I see for business bank account, it's old school and the technology used is has been...

murphaph

Seems like you only have one option: change bank to one that will allow what your business needs.

28064212

Celtarion wrote: »

The new EU SEPA regulation has introduced a better way to make some business outside of Ireland, but in the real world, it is not feasible at all.

SEPA hasn't actually changed anything in this regard. If your bank won't let you become a DD Originator now, they wouldn't have let you under the previous scheme either. Ring around the other banks, explain the situation, and find out what their requirements are

Jim2007

Celtarion wrote: »

The new EU SEPA regulation has introduced a better way to make some business outside of Ireland, but in the real world, it is not feasible at all.

No that was not the purpose.

Can I ask have you in the past being using DD to do business with customers in Europe?

The alternative would be for you to send a pro forma invoice to the customer and only after they have made payment ship the goods or carry out the service.