Facilitating reconciliation

R-messages offer the possibility to the different actors (debtor, debtor bank, creditor, creditor bank and CSM) to deviate from the standard process either before or after the due date and therefore an R-message indicates why a transaction could not be processed.

An R-message consists of a Reason Code and R-type. Both are stated on (electronic) account statements.
There are six different R-types being used: Revocation, Refusal, Reject, Refund, Reversal and Return.

• 1. Revocation: a request from the Creditor/Creditor Bank to recall/cancel the instruction for a collection prior to settlement. The Creditor can recall/cancel the entire SEPA Direct Debit batch or parts of it. These instructions should be sent at D-1 (Target day) at the latest.
• 2. Refusal: a claim initiated by the Debtor towards his bank before settlement for any reason, demanding not to pay a specific SEPA Direct Debit collection. It is possible to refuse the SEPA Direct Debit collection until 1 day (Banking business day) before the due date of the SEPA Direct Debit.
• 3. Reject: a SEPA Direct Debit collection that cannot be executed prior to inter-bank settlement by the Creditor Bank or Debtor Bank (invalid format, wrong IBAN, account closed, blocks set by the Debtor…)

• 4. Refund: a request from the Debtor for a refund of an executed SEPA Direct Debit Core collection within specified timelines (up to 8 weeks for authorized collections and up to 13 months for unauthorized collections). When a B2B SDD was used it will only be possible to have a refund for an unauthorized collection (e.g. no valid mandate). A timeline of 13 months will apply then. A Refund does not discharge the Debtor from his legal obligation to pay the Creditor in case he was provided the agreed service.
• 5. Reversal: is used when the Creditor realises that a direct debit collection should not have been processed after the Clearing & Settlement and reimburses the Debtor of the erroneous collection.
• 6. Return: a SEPA Direct Debit collection that is diverted from normal execution after inter-bank settlement and is initiated by the Debtor Bank within 5 Target days (e.g. in case of insufficient funds) or within 2 Target days for B2B.

Reason codes are part of R-messages. They are used to indicate why a transaction could not be processed. However sometimes it is not possible for the creditor to identify the cause of an R-transaction based on the reason code provided. A number of reason codes are not used because of legal restrictions (e.g. data protection laws) or local business practices in some countries. In most cases these reasons codes (e.g. AG01, AM04, MD07) are then not reported but are reported as MS03 (Reason not specified).

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