SEPA Direct Debit: A secure and efficient payment method
Published: 10 November 2015
According to the latest report from the European Central Bank, in 2013, the total value of fraudulent transactions conducted using cards issued within SEPA and acquired worldwide equated to €1.44 billion, which represented AN INCREASE OF 8% ON 2012. Unfortunately for the banks, this issue is far from being a recent problem.
To deal with this problem, many banks are developing their own anti- fraud solutions. For example, Oberthur Technologies and BPCE group have developed the first dynamic cryptogram payment card. The back of the card is equipped with a ‘mini-screen’ displaying the three-digit security code, which automatically changes on a regular basis. Ingenious, yes, but it does not protect against theft of the card itself… However, this is one example among others, which proves that banks are actively fighting against the issue. Discover why SEPA direct debit is a secure and efficient payment method
SEPA Direct Debit
What should you do if a third party tries to cash a cheque, which has not been correctly completed by the debtor? How can you refund bank transfers made in error? Likewise for bankcards, how can you identify the correct recipient of a bank transfer? Who hasn’t recognised a withdrawal on their bank account because the name of the merchant was not the same as the name shown as the entity that debited the account?
In contrast to other means of payment, SEPA Direct Debit offers real protection to the consumer. The consumer simply gives their IBAN details and pays directly from their bank account. Thus, there is no risk of theft involved…
Contrary to common belief, Direct debit strongly protects consumers. Banks guarantee an immediate money back guarantee in the event of error in the payment of the Direct Debit. Furthermore, the consumer is always given advance notice if the date or amount of the Direct Debit changes and it is possible to cancel it at anytime.
Furthermore, all SDDs contain a SEPA creditor identifier, which appears on the bank statement of the debtor. A SEPA creditor identifier is a standardised and unchanging identification number, which enables creditors across Europe to be identified by both the debtor and his/her bank.
The rise of the sharing economy
Due to the arrival and expansion of sharing economy we now no longer seek to buy, but rather to rent. For example, we now rent music on platforms such as Spotify, likewise for transport, we rent “Boris Bikes”. Direct Debit is the most suitable way to pay these recurring subscriptions. Furthermore, it is probably the payment method, which gives the most power to the customer, especially in terms of reimbursement when compared to other payment methods.
Currently there are very few unjustified Direct Debits and by consequence few contested payments. It is our job to educate the consumer and explain that there are payment alternatives to bankcards. Of course for single payments this is the most effective method. However, for recurring payments, SEPA Direct Debit is a secure and efficient alternative.