I don’t understand why SEPA direct debit was started a few years ago. Push based methods were working great for decades, and SEPA had unified national payment methods to a european level. There were national pull based methods with built in fraud guard rails, and automatic recurring payments for e.g. monthly subscriptions.
Then came direct debit, where giving out your IBAN now somehow became a fraud risk. Meanwhile, most companies still publish their IBAN on their websites. Customers hate giving away control over their account and seeing random money transfers from mysterious companies. Banks hate all the random middleman grabbing money out of accounts. We need these new middleman for some reason.
I have no idea why they implemented SDD like this. It reeks as if someone decided to force the US payment system on top of SEPA, even if the legal framework for it is missing, there is a huge cultural impedance mismatch, and the credit card based system is inferior in almost every way to the existing debet cards. Things that were working just fine in the 1980’s are now losing consumer trust because of SDD. All of this was a very predictable idiotic clusterfuck. Why?
Having a single European-wide integrated pull-based payment method is great for cross-border commerce. When I went studying abroad, I just gave the rental agency my IBAN, and they pulled the rent from my account the same way my local landlord did. I can sign up for services from any company in the EU and have recurring payments just like I would for local companies. That's not as easy if there's 27 national methods.
Furthermore, I don't think SDD is a big fraud risk. To be able to make direct debits, you need a contract with a bank, and, at least in my experience, they're quite thorough about that: you need to have a legal entity, banking history and show government identification; and even then the amount you can direct debit is limited to just a little more than your usual turnover. If a fraudulent debit happens anyway, you can one-click, no-questions-asked reverse them for up to eight weeks. After that, you can report it as an unauthorized transaction for up to 13 months and the bank will reverse it unless the creditor can show a signed mandate.
I don't think I've ever heard of anyone having had a direct debit from an unknown party. At least over here in the Netherlands, all banks also support requiring pre-authorization for direct debits nowadays, eliminating the risk completely.
> Then came direct debit, where giving out your IBAN now somehow became a fraud risk.
I do not know about other EU countries, but here in CZ, i have to allow each counterparty and set a limit to maximum amount of direct debit to that counterparty in order to direct debit transfer be accepted.
It is useful for transactions like monthly phone payments, where exact sum is different each month.
If your bank accepts direct debit without you allowing it, then it is a problem with your bank, not with SEPA.
Then came direct debit, where giving out your IBAN now somehow became a fraud risk. Meanwhile, most companies still publish their IBAN on their websites. Customers hate giving away control over their account and seeing random money transfers from mysterious companies. Banks hate all the random middleman grabbing money out of accounts. We need these new middleman for some reason.
I have no idea why they implemented SDD like this. It reeks as if someone decided to force the US payment system on top of SEPA, even if the legal framework for it is missing, there is a huge cultural impedance mismatch, and the credit card based system is inferior in almost every way to the existing debet cards. Things that were working just fine in the 1980’s are now losing consumer trust because of SDD. All of this was a very predictable idiotic clusterfuck. Why?