SEPA Direct Debit Supporting Europe’s new recurring paymen t method in CiviCRM

1. SEPA Direct DebitSupporting Europe’s new recurring payment method in CiviCRM Paul Delbar Project 60

2. Topics What the hell is this SEPA thing ? What business problem are we solving ? Solution architecture CiviSDD implementation process Status, plans Applause

3. What is CiviSDD ? SEPA Direct Debit and why you should care If you are not fundraising in any of the Single European Payment Area countries, feel free to skip this blog -- unless you want to discover how the amazing CiviCRM community is building support for what is becoming Europe's most important recurring payment instrument. Do you know what direct debit means ? Don't feel bad admitting it. A direct debit transaction is a payment that is initiated by the receiver, not the sender. In practice, a donor gives you permission to ask his/her bank to transfer money into your bank. Fundraising using direct debit is interesting because once your donors gives you the permission, they don't need to do anything : your job is to create the next debit instruction for every agreement you have, send them to the service provider who processes them (which could be your own bank or another company) and manage the exceptions that will occur (like your donors having insufficient balance in their account). Donors will feel it's not worth taking the effort to cancel the agreement (and feeling bad about it), so direct debit-based recurring donations tend to have a looooong life. SEPA was created to help facilitate funds transfer between member states. Its first accomplishment was SEPA Credit Transfer. For example, my bank account was called 778-5915387-91, which makes absolutely no sense to my Irish and Ukrainian fans who want to send me money. Thanks to SEPA, my bank account is now called BE23 7785 9153 8791, its IBAN number, and anyone in a SEPA country can transfer funds to me. It took banks quite a bit of effort to put this in place, but I'm told you can currently yell 'IBAN !' in any bank's IT department without people jumping behind the nearest desk. Recurring payments across Europe were still a pain though. Most countries had some sort of local instrument, like the Dutch machtiging or the Belgian domiciliëring, which were pretty useless if you wanted to support a Portuguese dog kennel or a Lithuanian orphanage, since they tended to be • off-limits to non-national bank accounts. SEPA Direct Debit was designed to provide a single system across Europe, based on IBAN bank account numbers, which would replace all national systems in time. Note the last two words of the previous sentence : while some countries (like Belgium) have been operating SDD for over two years, other member states are frantically trying to get ready before the April 2014 deadline. SEPA Direct Debit isn't easy for most non-profits, because of its administrative and technical requirements. You need to sign an agreement with the bank which will process your payment requests (yes, only one single bank for all of Europe will do), manage the agreements (called mandates in SEPAese) and submit the payment requests for all of the mandates in a rather complex XML format. Banks have small teams of knowledgeable folk, which typically aren't the ones non-profits talk to. Technical staffing and IT capability generally aren't abundant in non-profits. But the advantages are many : SDD provides a reliable, flexible and versatile payment instrument for single and recurring donations. So many organizations were stuck in the middle … • The CiviCRM community took notice of the issue. A number of CiviCRM integrators, being queried by their customers for a solution, decided to build a CiviCRM extension to support SEPA Direct Debit. The end result will be an open source extension, free for everyone to download, install and use. So if you're a CiviCRM user, you would be able to setup recurring SDD payments easily, generate the XML with a click of a button, and run  a recurring donation stream without going through the technical hassle. The Project 60 team working on this is targeting late June of 2013 for a first release, with current customers acting as pilot users as well as funders for the initiative. There's also a Make It Happen initiative for this extension. • Soon, you'll be able to install this extension and • offer SEPA Direct Debit as a payment option on a contribution page • import SDD mandates generated by face-to-face and other fundraising channels • automatically generate the required payment requests • generate the XML needed to sublit the payments to the bank • follow up on mandate and payment status, integrated in the contributions tab

4. What is CiviSDD ? Within the Single European Payment Area (SEPA), a new and unified model for direct debit handling has been defined, which has been rolled out over Europe over the last few years. Early 2014, most if not all countries will be required to support this payment mode. It allows for recurring and one-off direct debits (initiated by the creditor), but can be quite complex to handle. This MIH will allow CiviCRM users to setup a SDD compliant payment process. It will include the payment processor, admin screens for mandate and transaction management, and will contain the logic to generate the appropriate XML-format which is required by SEPA. In addition, we'll write up an integrator's handbook to assist in setting up the complete SDD process with your bank.  See also http://civicrm.org/blogs/pdelbar/sepa-direct-debit-and-why-you-should-care

5. What is CiviSDD ? SEPA Single European Payment Area, a comprehensive standardization program

6. SEPA Direct Debit • Organizes DD payments in SEPA zone • Clarify roles (creditor, debtor, banks) • Standardize documents and workflow • Supported by common legislation framework • Why is this relevant to CiviCRM ? • SDD B2C (Business to Consumer) governs all direct debit transactions, single and recurring • Replaces all country-specific protocols in 2014 • SDD is a very flexible payment instrument

7. SEPA Direct Debit for Dummies The nonprofit organisation sends an XML-coded transactions batch to its own bank 3 4 The donor’s bank executes the paymentusing the SEPA Credit Transfer scheme The donor signs a SEPA- compliant mandate … The nonprofit organisation encodes the mandate and generates transactions 2 1

8. SEPA Direct Debit workflow • Complexity for the nonprofit • Get an SDD contract with its bank • Manage the mandate lifecycle • Generate single or recurring payment requests • Generate the appropriate XML • Follow up on payment and exceptions • SDD has clear advantages • Fast notification • Flexibility (periodicity, amounts, …)

9. Where are the complexities ? • Legal requirements for mandates • Types of mandates & transactions • One-off (OOFF) • Recurring (FRST and RCUR) • Timeline for submission & processing • Retrieving status information • Batching transactions • Generating the XML

10. Mandates • mandate reference • debtor information • creditor information • in addition • monthly amount • when debits will start • pre-notification • SDD refund rules

11. SDD timelines Tdebit - 5 Tdebit Tdebit + 5 FRST RCUR Tdebit - 2 Tdebit + 2

12. Things going boo in the dark ERRORS ABANDONS UPGRADES Julie Tom Fred misses a few payments due to insufficient balance on her account gets an upgrade call and is willing to increase the monthly amount from 6 to 8 EUR is having second thoughts and decides to stop donating

13. XML … what can I say • Standard … not • Banks • write crap software • give crap errors like ‘XML error’

14. Project 60 SEPA Direct Debit Processing Deliverables Benefits • Support the SEPA Direct Debit B2C Core model / rulebook • Manage multiple creditor identities • Provide a SEPA-compliant Direct Debit payment processor • Manage the SDD mandate lifecycle • Generate one-off and recurring payment requests • Generate the XML required for bank submission • Automate the exception and feedback processing (requires CiviBanking) • Become operational with SEPA Direct Debit without a significant investment in understanding SDD protocols • Tap into the fundraising potential offered by flexible and versatile bank account-based recurring payments • Standardize recurring payments or memberships and long-term supporters on the new European standard • Be ready to deploy the new European recurring payment model in time ! • Integrator’s Guides : • Implementing an SDD workflow

15. Solution architecture

16. The SDD engine

17. Components

18. Data model for the SDD extension

19. Demo ? Really ?

20. Project 60 The naked truth

21. Project 60 Scope In real applications of CiviCRM, there are many processes which involve handling information between CiviCRM and bank accounts, which are currently handled manually or by custom scripts Financial Transactions (Bank Accounts) Importing bank payment information CiviCRM Decoding bank payments into contributions Reconciling contributions and bank accounts Managing SEPA Direct Debit recurring payments Project 60 is an initiative of a number of European CiviCRM integrators who want to develop a number of extensions supporting these processes.

22. Key Project 60 components Working with bank payment information Supporting SEPA Direct Debit payment processes Facilitate assisted interpretation of payment into contributions, memberships, …

23. Project 60 active participants • Tech tothe People – France • Xavier Dutoit • Systopia– Germany • Björn Endres, Fabian Schuttenberg • delius–Belgium • Paul Delbar, Chris Madou