The timing and progression of this type of event are fundamentally different from those of cancelling the customer’s payment method. Here, the failure to honour follows the transmission of the customer’s standing order to the bank or credit company, an action that is usually carried out once every month on the same date.
Most companies usually send bank direct debit orders as close as possible to the salary payment date (Based on the customer’s declaration or customer choice of date of payment). Credit companies require transmission in advance to be able to collect on time. We will mention here that in the credit card standing orders there is a difference between the payment date to the supplier and the customer’s payment date which is determined between the customer and his credit card company. Regarding bank standing orders or direct debits – the supplier receives the payment on the day the customer pays it.
Non-respect of the customer’s standing order indicates various situations of the customer’s inability to pay. This condition can be temporary or permanent. In some cases, the cancellation of a payment method is final and in some cases, the current payment is not honored but the payment method remains valid and can be transmitted again for collection. Let’s look at the different types of type B events – non-respect of a standing order:
Reject reason – Not sufficient funds
This is about the non-honoring of the customer’s direct order in his bank. This means that there was not enough money at that point in time in the customer’s bank account to pay the direct order. In this case, there is no damage to the means of payment and the standing order remains in effect, and theoretically it is possible to continue sending the standing order every month and accumulate additional rejects.
However, each rejected payment costs money to the organization that issued it, so the collection procedure must determine the number of refusals that a customer can accumulate until the organization proactively stops using the customer’s method of payment and classifies it as cancelled. For example, it can be decided that if a payment request comes back 3 months in a row without coverage, then the customer’s standing order is considered cancelled (for the organization) and the payment request will no longer be sent. However, the “no sufficient funds” situation can be temporary, and it is possible and even desirable to request the same payment later. Sending further requests for the same returned payment can create a compliance issue. Depending on the country you are in it needs to follow local regulations and, in any case, not become a form of harassment to the customer.
Reject reason – Account closed.
This reason can also be classified as a type B event – non-respect of the customer’s standing order if the reason for closing the account is a deterioration in the customer’s financial situation, but it is also possible that it is a technical reason – the customer changed bank, closed his account and forgot to update the organization on its new account. Therefore, the client’s handling scripts must be adjusted according to the circumstances.
Reject reason – Payment cancelled.
This is a proactive and one-time cancellation of the current payment made by the customer. It does not affect the standing order and therefore the payment method remains valid. You can broadcast the standing order a second time and also continue to broadcast it in the following months. Cancellation of a charge is usually initiated by the customer, although sometimes his bank manager
However, the cancellation of the charge may be due to the customer’s anger at the organization for justified reasons, so a degree of flexibility must be left in the collection process to identify such situations and treat the affected customer promptly.
Reject reason – Direct debit cancelled.
This is a proactive cancellation of the customer’s direct debit by his bank. The bank concluded that the customer would not honour his standing orders in the future and therefore terminated the arrangement. From the point of view of the organization, the payment method is permanently cancelled, and the customer must be contacted to obtain an alternative payment method.
Reject reason – Card is blocked.
The blocking of the card by the credit company is usually due to the customer’s failure to pay the credit company on time. Blocking a card is temporary, but sometimes leads to the cancellation of the card, except in cases where the customer quickly resolves his problem with the credit company.
But it is also possible that the blocking of the card is due to the customer’s demand due to loss. The customer cannot find his card but is not sure that it was lost or stolen and hopes that we will find it again. He can contact and request a temporary blocking of the card, so this possibility must be included in the collection scripts to avoid annoying a customer who is already in a stressful situation.
Reject reason – Card cancelled.
As far as the collecting organization is concerned, cancellation of the card by the customer or by the credit company is final, and the method of payment is no longer valid. The customer must be contacted for an alternative payment method.
NEXT: Type C event: technical return of the customer’s standing order