Introduction

Credit transfers and direct debits are – next to card payments – by far the most commonly used payment instruments in Germany and are therefore sometimes referred to as “traditional payment instruments”.

A credit transfer scheme encompasses functions, procedures, agreements, rules and instruments, on paper or in electronic form, enabling the execution of a payment instruction, which a payer issues to his payment service provider – for instance his house bank – in order to transfer funds to the beneficiary (the payee). One-off invoices or tax arrears are often paid by credit transfer, for example.

A direct debit scheme encompasses functions, procedures, agreements, rules and instruments, which allow the authorised debiting of the payer's account. Direct debits are initiated by the payee, either as an individual payment or as a series of payments and are based on the payer giving his consent (mandate) to the payee, his payment service provider or to the payment service provider of the payee. Typical examples of recurring direct debits are electricity or telephone bills while an example of a one-off direct debit would be a retail payment requiring a signature (also known as the electronic direct debit scheme or ELV).

In principle, credit transfer and direct debit schemes entail risks which need to be monitored and mitigated in order to maintain customer confidence in these payment instruments. In particular, these take the form of legal risks, operational risks, financial risks and management risks with varying degrees of weightiness. For example, inadequate management of the payer's direct debit mandate can result in financial risks, which may ultimately lead to the "debtor" rejecting a debit transaction parallel to the creditor being credited.

Implementation

The Bundesbank monitors market developments in the area of credit transfer and direct debit schemes and is involved in the shared oversight of SEPA direct debits and credit transfers through the Eurosystem.

In order to ensure harmonised monitoring across the Eurosystem, two oversight frameworks were published in October 2010: the Oversight Framework for Credit Transfer Schemes and the Oversight Framework for Direct Debit Schemes. These oversight frameworks, alongside the other payment instrument oversight frameworks, were revised, updated, and published in November 2021 as one single set of requirements: the Eurosystem's oversight framework for electronic payment instruments, schemes and arrangements (short: PISA framework). These standards are addressed to the competent governance body of the credit transfer or direct debit scheme. Though designed for use with the SEPA Credit Transfer and SEPA Direct Debit schemes, they can also be used by the national central banks of the Eurosystem for the oversight of national instruments.