Direct debit and return bills: how to do it

Introduction

Direct debiting bills is quite common with banks. Now known as a SEPA Debit, it is the authorisation the bank gets to pay or debit the bills we receive periodically. In other words, it schedules the payment of certain services to avoid unnecessary inconveniences at the end of the month.

It's common for any user or company to have to pay certain bills on a regular basis. Services such as electricity, water, gas, Internet or subscriptions to streaming platforms. In all these cases, the bank handles the process so you can stop worrying about the payment. Imagine how cumbersome it would be to have to make all these payments manually. With the risk this entails, since any delay in making a monthly payment could result in the service being suspended.

SEPA direct debits

They were created in 2014, when the EU decided to create a single payment area that used the euro. This new instrument has simplified transfers between EU countries and other associates (36 in total) tremendously. By using the same system, transactions are quicker. Unifying the process did away with previous obstacles, such as not knowing what country the payment came from.

This type of debit is also useful for business owners and self-employed workers. For example, if they want to direct debit their payments to customers. To do this, they just have to send a direct debit order to their bank. This document includes, among other things, the IBAN and BIC/SWIFT codes, as well as a series of data.

The direct debit order: what does it consist of?

This is the document that authorises the bank to pay the direct debited bills. Certain information is required to execute the order:

Explain that you want a SEPA direct debit order. A written instruction is required that lays it out clearly.

The application reference has to be included. This consists of a 35-character string consisting of letters and numbers.

Customer information (identification, ID and address), as well as the address of the creditor, i.e., the company demanding payment.

The BIC/SWIFT (Bank Identifier Code) of the bank that will issue the payments. In Spain, it has 11 digits. For more information, please see the following article.

The IBAN code (International Bank Account Number), which identifies the issuer of the customer's bank account. It is alphanumeric and, in the case of Spain, has 24 characters (4 + the 20-digit bank account).

How often to make the payment: once, quarterly, monthly...

Date and place of signing.

Applicant's signature.

It is important to note that to complete this direct debit, the destination account must have a positive balance. Otherwise, the bill will be returned. Then, when you stop receiving a service, you have to cancel it. If not, you run the risk of receiving future debits for products that you are no longer subscribed to.

Returned bills

Bills can not only be direct debited, they can also be returned. Sometimes, the electric company or the gym can send a duplicate bill. When this situation occurs, it is best to clear it up. The customer is free to return any bill, except for the payment of fees or loans. Spanish law sets the following deadlines.

• If you intend to return an authorised direct debited bill, the period is 8 weeks (50 days).
• If there is no signed direct debit order, this time period increases to 13 months.

Now you know more about SEPA Debits, returns and deadlines. Check all the information on bank accounts with CaixaBank.