Customer protections are in place to allow your customers to cancel a mandate or to receive refunds for unexpected or erroneous payments.
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Cancelling a mandate
Customers are entitled to contact their bank and cancel their mandate. Once the customer’s bank receives a request for a mandate cancellation, they must stop taking further payments from the customer’s account no later than three working days after the request was received. Any payments already taken that month will not be returned to the customer’s account in this instance.
The merchant can cancel a mandate through the 0605 file sent to Nets. This would need to be sent three banking days before the next payment date to ensure no future payments are taken.
A mandate will automatically expire if no payments are taken for 15 consecutive months. Mandates which expire cannot be reinstated, instead a new agreement must be created.
Cancelling a debtor agreement
A customer can cancel a debtor agreement with their bank at any time. Any mandates linked to this account would automatically be cancelled and within three banking days, and any future payments linked to these mandates would cease.
Customer rejections and reversals
In Denmark, a customer has until the seventh calendar day of the month in which payment is due to reject or reverse a single payment (that is going to be collected that month.). If the 7th falls on a weekend or a public holiday, the customer will be given an additional banking day by which to initiate the rejection or reversal.
If the payment has already been taken by the time the rejection or reversal is initiated, the funds will automatically be extracted from the merchant’s account and returned to the customer (i.e. reversal). If the payment has not occurred yet, it will be cancelled before any funds move between accounts (i.e. rejection).
The customer can initiate this rejection or reversal in a number of ways:
- Via their mobile banking app
- Via their online banking
- In person at their bank
Through the digital channels mentioned above, the customer will see an option to ‘reverse or reject’ the payment which will disappear after the seven day window.
The customer may only reject or reverse the full amount of a single payment and the cancellation of a single payment will not affect any future payments. The customer will notice the refunded amount as credit in the following month’s payment summary, however it may be shown against the original charge date.
A merchant cannot directly dispute a rejection or reversal initiated in this way by the seventh calendar day of the month. Any funds that need to be refunded are processed automatically by Nets who will send a request to the merchant’s bank, and the merchant will be notified of the rejection/reversal via the 0602 file from Nets. However, if the customer has unfairly rejected or reversed the payment, the merchant can re-charge the customer in the following month. If the customer rejects or reverses this second attempt then the merchant must ask the customer to pay via an alternative method (e.g. via an invoice).
If a customer wishes to initiate a reversal or rejection after the seven day window, it becomes known as a customer claim.
The customer’s bank may reverse a payment up to two working days after the due date. This could be for a number of reasons:
- There are insufficient funds in the customer’s account (and the payment was over 1000 DKK - see note below)
- The customer does not have a debtor agreement in place with their bank.
- The bank or customer cancelled the mandate before the payment due date.
- The customer no longer holds a bank account with the bank.
- There are errors in the payment data.
In this instance, the bank will send the reversal request to Nets, who will facilitate the transfer of funds from the merchant’s account to the customer’s account.
Please note: If a payment fails due to insufficient funds but the value of the payment is below 1000 DKK, the bank will absorb the cost and the merchant would not be required to return the funds.
If a customer wishes to request a refund outside of the seventh calendar day window, this is known as a customer claim. They can only submit this claim to their bank up until 13 months after the payment date.
A valid claim is sent from the customer’s bank to the merchant’s bank when:
- The customer’s account has been debited without a mandate in place.
- The customer account has been debited with amounts that do not align with the mandate.
A valid claim can also include any claim where:
- Payments are not registered correctly.
- Payments are affected by technical failure caused by Nets or the bank.
The procedure for these claims varies between banks so it is best to ask your bank how it is managed in specific cases. Nets are not involved with any refund requests which arrive after the seventh calendar day deadline (i.e. claims).
In case of a valid claim, the merchant may also be liable to cover the customer’s loss of interest on the funds in question.
Disputing a customer claim
If a merchant wishes to dispute a claim within the 13 month window, they can do so through their bank. They will be asked to provide evidence of the legitimacy of the mandate and payment in question.
To reduce the risk of customers seeking a claim you can:
- Make customers aware of upcoming payments. When customers are notified of payments in advance they have the option to raise any issues or cancel the payment before it is taken.
- Provide a great customer experience. Clearly displaying useful information for your customers allows them to get in touch if they have any queries, instead of seeking a claim or cancelling a payment.
- Process cancellation requests quickly. Mandate cancellation requests should be handled as soon as possible, otherwise payments may be taken on the cancelled mandate.
- Follow the Direct Debit scheme rules. Make sure you precisely follow and stay up-to-date with the Direct Debit scheme rules set out by Nets.
Managing claims with GoCardless
If one of your customers initiates a claim, GoCardless will notify you immediately and work with both you, and your customer to manage the process. GoCardless aims to minimise the risk of a customer claim and ensure the Direct Debit scheme rules are satisfied.
These rules include:
- Payment pages: These should be clear and compliant.
- Advanced notice: GoCardless will automatically notify your customers of scheduled payments and will pass on necessary information to Nets to be included in monthly Payment Summaries.