Guidance on reason codes for SEPA Direct Debit R-transactions

Guidance documents
Direct debit

The released the updated version 4.0 of the document ‘Guidance on Reason Codes for Single Euro Payments Area Direct Debit R-transactions’ in November 2017.

To give some background: one of the main benefits of the Direct Debit (SDD) schemes is that the scheme rules streamline exception handling, at both process and dataset level. This allows straight-through-processing and automated exception handling end-to-end. Possible exceptions to the normal execution of a direct debit collection include refunds, returns, rejects, refusals and reversals (commonly referenced as ‘R-transactions’ and described in detail in the SDD rulebooks).

The and SDD Business-to-Business (B2B) rulebooks specify reasons which trigger an R-transaction, i.e. data elements required to convey information to the payee (biller) regarding the R-transaction. These data elements identify the type of the R-transaction; name the initiator of the R-transaction; and detail the reason for the R-transaction.

The correct application of these reason codes by a debtor bank (the bank of the payer), informing a creditor bank (the bank of the biller), about a failed SDD collection is crucial to allow the biller to determine its reaction.

The version 4.0 of the document ‘Guidance on Reason Codes for Single Euro Payments Area Direct Debit R-transactions’ reports principal changes incorporated into the 2017 SDD  rulebooks taking effect on 19 November 2017:

  • Reason code AG02 for ‘Operation code/ transaction code/ sequence type incorrect, invalid file format’ can also be used for the r-transaction type Return;
  • Under the 2017 rulebook specifically:
    • The extension of the return period from two to three banking business days;
    • Reason code MD07 for ‘Debtor deceased’ can also be used.

The 2017 SDD rulebooks also formally state that this guide prescribes which ISO code should be used for each of the reasons under each R-transaction type.

View the Spanish translation of the document made by the Spanish banking association.

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