Like any payment method, SEPA Direct Debit may experience unsuccessful transactions. These are called R-Transactions. Although a rare occurrence, failed transactions can have an impact on a merchant’s revenue, particularly within the context of a recurring payment model. A failed transaction is not necessarily a sign of a bad customer or a bad service, and certain types of r-transactions can be recovered.
Types of R-transactions
There are 4 types of R-Transactions that can happen at various stages of the SEPA Direct Debit flow (see SEPA Direct Debit Timeline).
- Reject: The debtor bank rejects the SEPA Direct Debit (SDD). This may happen if the bank account is closed, invalid or does not exist.
- Refusal: There can be a refusal for a single transaction (the mandate remains valid for further transactions) or a revocation of the mandate, meaning additional transactions will be systematically refused.
- Return: The debtor bank returns the SDD because there was an issue while processing the SDD. The vast majority of returns are because of insufficient funds on the debtor account.
- Refund: Between D and D+8 weeks, the debtor can ask for a refund without any justification. Between D+8 weeks and D+13 months, the debtor can initiate a refund only in the case where s/he claims to never have signed a mandate.
The R-Transactions can have various root causes. Here is an overview of the most common types of R-Transactions: