Electronic mandates for SEPA direct debit transactions
The migration to the SEPA payment instruments in February 2014 poses new challenges to payment service providers and users. From that date on, a creditor needs to be in possession of a mandate signed by the debtor in order to collect direct debit payments. Fraunhofer IAO has conducted a comparative study of solutions for SEPA-compliant electronic mandates with regard to the advantages and disadvantages for debtors, creditors, and banks.
Until now, direct debit has been the payment method of choice for many payers and payees, especially in Germany. This method is appreciated by all parties for its convenience, and especially the simplicity of setting up direct debit arrangements. As of February 2014, banks and payees (creditors) must adapt their direct debit processes to the requirements of the SEPA Direct Debit (SDD) Schemes. Among other things, the payer (debtor) needs to sign a SEPA-compliant mandate to give his or her consent to a one-off or recurrent direct debit. Given the increasingly widespread use of electronic payment orders, there is a need for suitable electronic mandate solutions that provide the required security while being easy to implement.
This is the subject of Fraunhofer IAO’s white paper entitled “Electronic Mandates for SEPA Direct Debit Transactions”. The white paper was produced with the financial support of EBA CLEARING, the provider of the electronic authorisation solution MyBank. The study looks at various alternative forms of electronic mandates and evaluates their advantages and limitations. The white paper compares the following alternatives:
E-mandate solutions based on the 2-corner model, which include processing by the debtor and the creditor only;
E-mandate solutions based on the 3-corner model, which additionally include processing by the debtor’s bank;
E-mandate solutions based on the 4-corner model, which additionally include processing by both the debtor’s and the creditor’s bank.
The white paper provides service providers, payees and technical providers with an overview of the system security, user-friendliness, and practicability of the different solutions.
The document is available in English and German and can be downloaded free of charge by clicking on the following link: www.e-business.iao.fraunhofer.de/emandates
The basis for all work undertaken at the Fraunhofer IAO is a deep conviction that business success in a globalised arena is contingent on an ability to profitably leverage new high-tech potentials. In order to optimally exploit these opportunities, companies must be capable of developing and implementing customer and employee-oriented technologies faster than their competitors. Work organisation concepts must be simultaneously innovative and anthropocentric. A systematic design, in other words, is the outcome of pooled management and technical expertise. This holistic perspective when it comes to project processing ensures that equal consideration is given to commercial success, employees' interests and social consequences.
Through its close cooperation with the Institute for Human Factors and Technology Management (IAT) of the University of Stuttgart, Fraunhofer IAO unites basic university research with applied science and business practice.
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