SEPA Direct Debit Reversals

Reversals of direct debits are initiated by the party receiving the collection order. Typically a reversal will be initiated by your customer when they have identified that a given collection was duplicated due to either human or technical error, or, for example, their customer cancelled an order but was still charged. A reversal of a Direct Debit payment can also be made due to a refusal to accept the funds, an example of where this could happen is if a merchant has accepted an order for goods, but is then unable to fulfil it, due to stock shortages. In this case, the initial payment would have been made and taken in good faith, and then reversed when it was discovered that the receiving party was unable to meet its obligations.

There are two points in time during the payment lifecycle that a reversal can be made; during the pre-notification stage, which can be up to 14 days from the time the collection is to be carried out, and no later than five banking business days after settlement. For SEPA B2B payments, the deadline for enacting a reversal is even stricter, you have only two business days from the settlement date to initiate a reversal. After that time, you must use the refund flow.

A reversal is linked to a collection order and the SEPA message must contain the original collection order ID. When a reversal is made after settlement, the funds will be returned with another SEPA transaction and will take the same amount of time a normal SEPA payment takes. If a reversal request is made during the pre-notification stage, the collection does not take place and there is no actual movements of funds between creditor and debtor accounts.

Acceptable reasons and time limits

Time limits

Reason codes

Statuses for a reversal

Reversing a payment via UI

To reverse a payment from the UI,:

1. Navigate to the payment you want to reverse in the SEPA DD Outgoing screen.
2. Select the instrument used (CORE or B2B).
3. Select a Settlement Date.
4. Open the transaction.
5. When you are confident that this is the correct transaction, click again to open the detail view. From this view you can choose the appropriate reason for the reversal from the drop-down list.
6. Select Reverse Direct Debit.

Once the reversal has been processed, the transaction will receive the status Pending Reverse.

Once the reversal has been successfully completed, in the same detail view, you will see the related reversal transaction and its current status.

Reversing a payment via API

To reverse a payment via API you will need to use our Direct Debit Reverse that takes a collectionId as a path parameter and a JSON body containing the reasonCode for this reversal. Acceptable reason codes are listed above in acceptable reasons and timelines, any other value will result in an HTTP 400 error with the error reason badReversalReasonCode.

If the operation was successful you will receive an HTTP 200 ok response, the reversal will be added to the queue, and processed by the Outgoing SEPA Direct Debit scheduler. You can follow the progress of the reversal in the Mambu Payment Gateway (MPG) UI. When you open the detail view for a reversed payment, the original transaction and linked reversal will be shown side by side.

Incoming reversals

If a reversal request has been made to your customer who was the receiving party in a given transaction, the request must be handled. The SEPA rulebook gives a deadline of 15 days to respond to a reversal request.

Incoming reversal requests will appear in the SEPA DD incoming screen in the UI. Depending on the current stage of the SEPA payment, the MPG will automatically handle the incoming reversal in different ways:

• If the reversal was received before the settlement date, the transaction will be immediately reversed and no funds will be taken from the debtor account. The original SEPA transaction will be given the status Reversed (Interrupted) in the MPG and the reversal transaction will receive the status Reverse Accepted.
• If the reversal request was received while the original transaction is still in the process of settlement, the reversal transaction will receive the status Pending Original Transaction Completion. After settlement the reversal will be processed in the same way as below.
• If the reversal was received after the settlement date, the reversal will first receive the status ‘Pending Reversal’. Once the related debit transaction in the linked Mambu account is reversed, the original SEPA transaction will be given the status Reversed in the MPG and the reversal transaction will receive the status Reverse Accepted.

You will be able to see the initial transaction and its reversal side by side in the detail view.