Rights and duties in the use of direct debits

Rights of creditors and debtors

Before entering into the direct debit contract with the payment service provider, customers are entitled to receive complete information on this service.

Should customers so request, this information must be provided on paper or on any other durable medium.

The information must be presented in an easily understandable manner and must indicate, in particular:

  • The data necessary for the proper execution of direct debits, namely the IBAN;

  • All charges related to direct debits, as commissions, expenses and any fees payable by the customer to the respective provider;

  • The effective exchange rate or benchmark exchange rate to be applied (if applicable).

The information made available by the payment service provider to the debtor and creditor before and at the time of conclusion of the direct debit contract shall be provided free of charge to consumers and micro-enterprises.

Debtors who are consumers have the right to set limits on the collections by direct debit in their payment accounts.

These limits may be of a temporary nature (final term of direct debits) or be related to the frequency, setting of maximum amounts to be collected and of total or partial blocking of direct debits (positive and negative lists of creditors).

Debtors are entitled to have the direct debits collected in the payment account on the day agreed between the debtor and the creditor. It is up to the creditor to notify the debtor in advance of that date.

The creditor may use the debit notice to communicate to the debtor the creditor or debit mandate numbers as it is the creditor’s responsibility to provide the debtor with all the information necessary for the proper functioning of the system.

In cases where the receipt of the direct debit instruction takes place on a day on which the payment service provider is not open to the public, the direct debit instruction shall be deemed to be received on the following business day.

After a direct debit is made, the debtor’s payment service provider must provide the debtor with at least the following information on paper or other durable medium:

  • A reference that identifies the direct debit, including information regarding the payee (identifier and denomination of the payee) and the direct debit mandate;

  • The amount of the direct debit operation in the currency indicated by the debtor;

  • The amount of any charges to be borne by the debtor and respective breakdown;

  • The submission data (for example, a description of the operation), if applicable;

  • The exchange rate applied, if applicable;

  • The date of receipt of the payment order.

Immediately after the direct debit is made, the creditor’s payment service provider must provide or make available to the creditor (on paper or on any other durable medium) the following information:

  • A reference that allows the creditor to identify the direct debit and, where applicable, the debtor and any information conveyed in connection with the transaction;

  • The amount of direct debit in the currency in which the funds are made available to the creditor;

  • The amount of any charges that the creditor must bear and, where applicable, the respective breakdown;

  • If applicable, the exchange rate applied to the direct debit by the creditor’s payment service provider, as well as the amount of the direct debit before the currency conversion;

  • The value date of the credit.

The information made available by the payment service provider to the debtor and to the creditor, throughout the term and execution of the direct debit contract, must be provided free of charge if they are consumers or micro-enterprises.

Debtors have the right to request the revocation of a payment order for direct debit not yet processed in their account from the payment service provider where the account is based:

  • If the debtor is a consumer or micro-enterprise – until the end of the business day prior to the day agreed with the creditor for the execution of the debit in question;

  • If the debtor is not a consumer or micro-enterprise – the debtor and the payment service provider may agree on a different deadline than the one mentioned above.

The proof of the existence and regularity of debit mandates is the responsibility of the debtor’s payment service provider.

Debtors who are consumers or a micro-enterprise are entitled to request from the payment service provider where their payment account is based the reimbursement of direct debit transactions already carried out within eight weeks of the date on which the debit was processed, provided that:

  • The direct debit mandate granted by the debtor does not contain, at the date of issue, the exact debit amount;

  • The amount of the debit in question exceeded that which the debtor could reasonably expect on the basis of his or her previous profile of expenditure, pursuant to the framework contract he or she concluded with the payment service provider and in the particular circumstances of the case.

However, where this has been expressly provided for in the framework contract between the debtor and the payment service provider, the debtor is entitled to reimbursement, even where the above conditions are not met.

After receiving the request for reimbursement, the payment service provider has 10 business days to replenish the funds in the payment account. Reimbursement may only be refused if the conditions listed above are not fulfilled or there is no agreement that requires verification.

If the debtor is not a consumer or a micro-enterprise, the conditions for submitting requests for reimbursement may be negotiated with the payment service provider.

Debtors have the right to request the rectification of any debits that were unauthorised or incorrectly executed from the payment service provider where their account is based:

  • If they are a consumer or microenterprise – within 13 months from the date the debit was processed. The request for rectification shall not be limited to that period in cases where the payment service provider does not comply with the information obligations to which they are obliged;

  • If they are neither a consumer nor a microenterprise – the debtor and the payment service provider may agree on a deadline other than 13 months.

Debtors have the right to terminate the direct debit contract at any time and may have to observe a pre-notice period of no more than one month if this was agreed with their payment service provider.

The termination of the direct debit contract only has an effect on the relationship established with the payment service provider, i.e. it does not extinguish any liabilities resulting from breach of the contract with the creditor.

Payment service providers may not charge consumers and micro-enterprises for the termination of the direct debit contract.

If the payment service provider submits a proposal to change the conditions and information of the contract (by means of a communication sent at least two months in advance of the date on which the payment service provider intends to make the changes), the debtor is not obliged to accept the proposed changes and may, before the proposed date of application of the changes, terminate the direct debit contract with immediate effect and without charges.

The payment service provider may also terminate the direct debit contract, provided that this possibility is expressly provided for in the contract. In this case, the payment service provider must inform the debtor in writing of the termination, with a pre-notice of at least two months.

Debtors have the right to submit, through the complaints book or directly to Banco de Portugal, complaints based on non-compliance with the legal rules applicable to direct debits.

Debtors also have direct access to effective and adequate alternative dispute resolution bodies, without prejudice to the access to legal means.

The payment service provider is obliged to inform the customer about the complaint procedures and the means available for the alternative dispute resolution.

Duties of creditors and debtors

Creditors must adopt debit mandate forms that, regardless of the medium used to obtain them, contain at least all the mandatory information contained in the direct debit mandate template available on Banco de Portugal’s website.

Creditors must also check, by means of an original identification document, the particulars entered in the direct debit mandate, namely the signature of the debtor.

The collection of the debit mandate through electronic means must comply with the applicable legislation, which provides for the existence of a certified electronic signature of the debtor or evidentiary agreement signed at a prior moment by the debtor.

Direct debit mandates granted by debtor customers and any changes thereto shall be kept by the creditor under appropriate conditions of security and confidentiality, even if obtained through electronic means.

Creditors must provide evidence of the direct debit mandates in their possession whenever required by the payment service provider.

Creditors should only initiate collections for which they hold a valid direct debit mandate.

Creditors should cancel the mandates that are no longer supported by a contract with the debtor customer or which have been replaced by a new mandate.

Where a change to the direct debit mandate has been communicated to the creditor, the creditor should take the change into consideration in the execution of the collection immediately ensuing.

In the event of a change in the payment account to be debited by the creditor, the debtor must indicate the new IBAN to the creditor, preferably by signing a new direct debit mandate.

If the change of account implies a change of the payment provider, a contract with the new payment service provider will be necessary to allow direct debits to be made.

Debtors must check that all debit mandates correspond to what has been agreed with the creditors and whether the collection corresponds to the amount actually due.

On the collection date of the direct debit, debtors must ensure that there are sufficient funds in the payment account to cover the amount owed.