Direct debit

You can arrange for certain regular payments to be settled automatically. Automating such transactions is both convenient and efficient: just like setting an automatic gate or saving a file on your computer, it saves time and effort while helping you avoid the inconvenience of forgotten payments. This is particularly useful for paying bills or loan instalments. How can it be done? By activating a direct debit service.

What is a direct debit?

Direct debit is a payment service that enables you to make automatic payments to a provider of goods or services, whether a private individual or a company (such as a gas supplier). It can be used for one-off payments or for recurring ones with fixed due dates, such as utility bills or loan repayments. The full name is SEPA Direct Debit (SDD), where SEPA stands for Single Euro Payments Area.

The service is offered by banks, Poste Italiane, Payment Institutions (PIs) and Electronic Money Institutions (EMIs). You can activate it if you hold a payment account, a credit card, or an 'account card' (a payment card linked to an IBAN, like a current account or similar).

Why use direct debit? With automated payments, you save time and reduce the risk of missing a due date.

How it works

Imagine you choose to pay your gas bill by direct debit, using your bank account.

To activate the service, you must first authorise the payment recipient (in this case, the gas company) to collect the amount directly from your account. This is done by signing a mandate. You must also provide your IBAN to the payee.

At each due date, the gas company submits a payment request to your bank. The bank then processes the request and debits the corresponding amount from your account - without requiring your authorisation each time.

You may revoke a direct debit instruction up to the business day prior to the scheduled settlement date (the day the funds are debited from your account).

Mandates do not necessarily specify the amount to be debited. However, if the sum collected is significantly higher than expected, considering the agreement, contract terms, and specific circumstances, you may request a refund within eight weeks from the date the amount was debited.

If a debit is made without your authorisation, you have 13 months to raise a dispute, in accordance with European regulations.

Costs

Direct debit charges may:

• be calculated on a per-transaction basis, in which case you pay a fee for each direct debit; or
• be included in an annual account fee, meaning that only transactions exceeding a specified annual limit may incur additional charges.

To choose the most cost-effective solution, it is advisable to estimate the number of direct debits you expect to make over the course of the year.

Risks

While automatic payments are convenient, it is important to maintain oversight.

• Monitor your account statements. These list all debits from your account. Reviewing them regularly helps ensure you remain aware of your automatic outgoings.
• Ensure sufficient funds are available. Ahead of a scheduled debit, check that your account balance is sufficient.