How BNP Paribas is cracking down on direct debit fraud.

A smart way to pay – direct from bank accounts across Europe.

Direct debit offers consumers a convenient way to pay, especially for recurring services like utility bills or subscriptions. In the Single European Payments Area (SEPA), which covers 36 countries and territories, SEPA Direct Debit (SDD) is used in more than 20 billion transactions every year. [1] SDD ensures consumers make their payments on time and helps businesses optimise their reconciliation and cash flow. For many merchants with European growth ambitions, SDD is a key part of their payment strategy.

BNP Paribas Cash Management is a recognised leader in SDD, enabling businesses to collect domestic and cross-border payments across Europe. Its EasyCollect solution centralises and automates the SDD management process in a single user-friendly tool for the bank’s customers. To prevent fraud, BNP Paribas decided to integrate an innovative offering from Worldline into this SDD solution.

Time to take action on IBAN fraud.

When choosing to pay by direct debit, customers first need to give a merchant permission to debit their account. They do so by entering their name, address and bank account details in a so-called SDD mandate, using their IBAN (International Bank Account Number).

It’s not a number many people have in their head, so mistakes can be made. Worse, fraudsters can maliciously enter someone else’s IBAN. They can then receive a product or service, with payment taken from a bank account that is not theirs. Under the terms of the SDD scheme, merchants are required to refund the money to the defrauded customer.

Whatever their line of business, a merchant is at risk of incurring significant costs and losses. According to the Banque de France, more than 60% of fraudulent direct debits are the result of misuse of an IBAN[1]. BNP Paribas decided it was time to take action.

A new way to validate accounts for SEPA Direct Debit transactions.

BNP Paribas wanted a better way of verifying that a customer really is the owner of the IBAN on the SDD mandate.

Enter Account Validation from Worldline. This innovative Open Banking solution transforms the customer journey and delivers a whole new level of security.

When a consumer selects SDD to pay for a service on a merchant’s website, an intuitive interface will guide them to choose their country and bank. They are redirected to their banking website or app where they log in following the usual Strong Customer Authentication (SCA) procedures. Worldline’s Account Information Service (AIS) then retrieves their banking details and automatically enters the customer’s IBAN on the mandate, which the customer then signs electronically.

This new process significantly reduces the risk of human error and fraud.

To consolidate its position as a European leader in global cash management,

BNP Paribas has integrated this white label service into its EasyCollect platform, enhancing its offer to merchants and strengthening customer loyalty. 

Stronger security with reduced processing costs.

Good for…Merchant customers of BNP Paribas Cash Management:

• Even higher security when accepting payments direct from bank accounts across Europe.
• Lower expenses for investigating rejected payments and from lower processing costs, with fewer refused transactions, refunds and reversals.

Good for…Consumers:

• A user experience that is smoother, simpler and more secure than ever.

BNP Paribas has already implemented the solution in Germany, Italy and France and plans to roll it out in more countries. As befits one of Europe’s largest banks, the solution will help spur cross-border commerce and contribute to the goals of the European single market.

[1] https://www.europeanpaymentscouncil.eu/what-we-do/sepa-direct-debit

[2] See https://www.banque-france.fr/rapport-annuel-de-lobservatoire-de-la-securite-des-moyens-de-paiement-2019   
https://www.banque-france.fr/rapport-annuel-de-lobservatoire-de-la-securite-des-moyens-de-paiement-2021
https://www.europeanpaymentscouncil.eu/document-library/reports/yearly-update-payment-threats-and-fraud-trends-report