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The Opportunity for Customer Relationship Management

While the requirements for SEPA Credit Transfer (SCT) migration are relatively well-understood and straightforward, migration to SEPA Direct Debits (SDD) is a more challenging undertaking. The SDD schemes (core and B2B) were launched nearly 3 years after SCT in November 2010, and adoption was further delayed by ongoing uncertainty about the ability to use existing direct debit mandates for SDD. Consequently, according to ECB figures, only 1.9% of candidate direct debits were SDD in December 2012, compared with nearly 35% of SCT as a proportion of total credit transfers.

The greater part of most companies’ SDD migration project will be to the core scheme, which replaces most domestic direct debit schemes, whereas the B2B scheme is a new initiative. SDD will be governed by a consistent mandate across Europe, and can be used for cross-border as well as domestic payments/ collections across SEPA. Although in most countries, current mandates will be valid for  the core SDD scheme, there remain a number of changes and extensions to existing data that need to be made. For example, new data elements include the mandate ID (assigned by the creditor), creditor identifier, creditor reference field, on-behalf-of fields and other optional purpose codes. In addition, new mandates need to be defined for new customers in their local language.

The mandate management process also differs from existing domestic schemes. The mandate is concluded between the debtor and creditor, not their banks, with a variety of different mandate types depending on whether the SDD is ‘one-off’ or recurring. In addition, mandates need to be held and managed by the creditor. As the current adoption rate illustrates, there is still considerable uncertainty amongst corporates about the process for SDD migration and future mandate management requirements. While the task should not be underestimated, particularly for companies with high volumes and direct debit schemes in various countries, companies are not necessarily focusing on the right areas.

There are technology solutions available that reduce the effort needed to complete the technical migration and ongoing mandate lifecycle management. This then allows SDD stakeholders such as treasury, accounts receivable and sales to focus on how best to leverage the benefits of a cohesive, pan-European direct debit scheme, and ensure appropriate communication with customers. These are the key issues on which the SDD migration project should ideally be focused. Customers need to be advised of the changes to direct debits, and using the opportunity that the core and B2B SDD schemes provide to increase the amount of cash collected by direct debit, both from retail and commercial customers.

SDD migration brings technical and process challenges but the need and opportunity for customer communication and customer relationship management should not be underestimated.

Have you begun your SDD migration? If not, what has been your biggest challenge?


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