Regulatory Alerts2013-10-08 | BPS/DIR/GEN/01/029Frequently Asked Questions on Direct Debit Scheme
A direct debit (also known as "Direct Debit Instruction" or "DDI") is an arrangement where a payer authorizes a third party, usually a bank, to collect payments directly from their account on behalf of another entity. The process involves the following steps: 1. The payer gives a direct debit instruction (DDI) to their bank, providing details about the payments they want to be collected and the biller's details. 2. The biller sends an invoice or billing statement to the payer for the goods or services provided, along with instructions on how to make payment via DDI. 3. The bank collects the money from the payer's account and credits it to the biller's account on the specified date. 4. The payer receives a notification of the transaction, usually in the form of an email or SMS message. 5. If there are any errors in the direct debit instruction, such as incorrect payment amounts or dates, the payer has the right to dispute the transaction and receive a full refund from their bank. 6. Direct debits can be cancelled at any time by notifying both the payer's bank and the biller. Key things to note about direct debits in Nigeria include: - Banks are responsible for the implementation, supervision, and control of the DDI scheme in Nigeria. - The maximum number of monthly transactions allowed per account is 30. - A notice period of 14 working days is required to cancel a direct debit mandate. - If an unpaid direct debit item is not returned within the applicable clearing cycle, penalties may be imposed as prescribed by the Central Bank of Nigeria. - The biller must inform the payer about any changes in payment amounts or dates at least 14 working days before the next payment is due. If you have further questions or require more information on direct debits in Nigeria, please refer to the "Guidelines on Nigeria Direct Debit Scheme" available on the Central Bank of Nigeria's website (www.cbn.gov.ng) or consult with your bank.