Direct debit might be a good option for companies that seek to lower their customers’ default rate. This article will explain the rules and the necessary procedures for direct debit agreements in Brazil.
Many companies use direct debit to automatically charge their customers in a given day of the month, straight from their bank accounts. In Brazil, this procedure avoids the emission of a boleto bancário, and is used more frequently by services that require a periodical payment, like cable television, telephone, electricity, or water.
This kind of service in Brazil requires an agreement between the interested company and a Brazilian bank. The agreements between these parties are regulated by Febraban or Federação Brasileira de Bancos, which is the Brazilian Bankers Federation.
The entity states that all the customers who chose to pay through direct debit must be account holders of that bank participating in the agreement. Also, at any point, the customer may require to exit the list of direct debit payers.
Every single information about the register of customers, the conditions of the agreement, and the price charged by the financial institution to make this service available must be listed in a contract between the company and the bank. Conditions and prices for this agreement may vary according to the chosen financial institution.
After the approval of the conditions established by the bank, the agreement must be ratified. A method to register the customers must also be chosen. There are two available methods:
- Made strictly by the bank, where the customers are first registered in the financial institution. After approval, the company may begin to charge through direct debit.
- Mixed, where the registration of customers can also be made directly by companies in order to expedite the process.
If the mixed registration method is chosen, the company is responsible for collecting the customer’s bank account information. In this case, the register is sent to the bank along with the first debit of that client. In case all information is correct, the payment is automatically made.
Some precautions must be taken if the mixed registration is chosen. Febraban requires that some information must be explicit in the invoice or expiration warning issued by the business. Some examples are:
- The customer’s identification with the company.
- A message, warning the charge via direct debit.
- The expiration and status of the previous charge.
All the processes involved in a direct debit agreement are based on the information exchange between the company and the bank. Febraban has a list of forms, named Registros, for every situation that may require dialogue between both parties. The main registros are:
- B - Used to register a customer who is willing to pay through direct debit. It is generated by the bank to the company. It must contain the customer’s bank account and personal information.
- C - Generated by the company to the bank if the customer’s request is denied for any reason. Must contain similar information to Registro B, in addition to the explanation why the company rejected that request.
- D - Filled by the company and sent to the bank when customer information needs to be altered. This form is also used when the business needs to exclude him from the direct debit agreement.
- E - Used to register when a payment is made. Contains the expiration date of that debt and its value. It is filled by the company to the bank.
- F - Generated by the bank for every Registro E received. It basically answers if the payment was successfully made.
Febraban also defines a standard format for every document listed above. They must obey specific characteristics, such as numbers aligned to the right and letters aligned to the left. Most of the Brazilian banks open to direct debit agreements offer the forms and archives already, following the Febraban standard.
Febraban claims that even though the procedures and documents are listed and specified, customers will only enter a direct debit agreement if they fully rely on the company and the bank. The entity then listed some recommendations, seeking a better experience for all parts. They are:
- Let the customer be sure that the agreement is already in progress, when he will be charged, and exactly how much he is paying. This can be done, for example, through the mail, and it reinforces the customer's reliance on the business.
- Periodically, let the customer know that he does not own any current debt.
- Offer a service to answer possible questions. Also, make it easy to print a copy of the invoice or expiration warning, if needed.
- If the client does not want to be charged via direct debit, act promptly. It is also recommended to issue a message telling the customer that this was done successfully.