How long may a money transfer take?
Upon transposing of the EU Payment Services Directive into German law, the provisions relating to the time limits for executing transfers as set out in the German Civil Code (Bürgerliches Gesetzbuch – BGB) were revised. Pursuant to section 675s BGB, the following time limits apply:
- 1 day for transfers in euros within the EEA
- 2 days for transfers instructed by means of a transfer form (i.e. paper-based)
- 4 days for transfers within the EEA which are not made in euros;
- no limits for transfers outside the EEA..
As a rule, credit institutions may not depart from the specified time limits to the detriment of their customers (section 675e (1) BGB; see section 675e (2) sentence 2, (3) and (4) BGB for exceptions to this).
Calculation of the time limits is based on business days, i.e. days on which all parties involved in performing the transfer maintain business operations necessary for this (section 675n BGB). Saturdays, Sundays and statutory holidays as well as days on which the banks are not open for counter operations (such as Christmas Eve and New Year’s Eve) are not business days.
For details regarding the crediting of the transfer amount to the recipient account, please refer to the question "With what value date is my bank required to credit incoming transfers?"
What is meant by a direct debit order, the SEPA direct debit scheme, or a collection authorisation in connection with direct debits?
A direct debit order (Abbuchungsauftrag) is a less commonly used form of direct debit in which the customer instructs its bank to honour direct debits in favour of a certain payee and to debit them to the customer‘s account. The customer is then no longer required to give any further consent for individual direct debits to be charged.
In a collection authorisation (Einzugsermächtigungsverfahren), the customer allows the payee to collect a certain amount from the customer’s account. With effect from 9 July 2012, this authorisation also constitutes an instruction to the customer’s bank to debit the customer’s account.
In the case of a SEPA direct debit , the customer gives the payee permission to collect the amount due from its account. This permission also constitutes an instruction to the bank to honour the direct debit received.
From 1 February 2012, there are plans for only the SEPA direct debit scheme to be used for direct debits. Until then, existing collection authorisations will be converted into SEPA direct debits by changes in the law so that existing direct debit orders will still continue to be collected.
Debit transfers made using the direct debit mandate procedure may be objected to by the customer (see question: "What is the time limit for objecting to a debit transfer?").
You can find further information on SEPA using the following link: http://www.bundesbank.de/zahlungsverkehr/zahlungsverkehr_sepa.php
What is the time limit for objecting to a payment order?
A direct debit authorisation can be revoked by giving notice to the paying party‘s bank or to the payee. If the notice is given to bank, the revocation will take effect one bank business day after it has been received. Subsequent direct debits will no longer be authorised and any direct debits already executed will be reversed. This means that it is important for the notice of revocation to be given to either the payee or the bank by the end of the business day before the due date (section 675p (2) of the BGB) .
This provision is valid for collection authorisations and direct debits using the SEPA basic direct debit .
Direct debits executed using a direct debit order may not be revoked in principle; the only possibility is for the payee to withdraw the debit order and to instruct its own bank to return the amount debited.
After a payment order has been received by the bank, it is normally no longer possible to revoke it (section 675p (1) of the BGB).
However, if a certain date has been agreed between the customer and the bank for executing the transfer (e.g. in the case of transfers executed as part of a standing order), the customer may revoke the payment order by the end of the business day preceding the agreed date (section 675p (3) of the BGB).
The payment order may be revoked only after the dates specified if this has been agreed. In the cases set out in section 675p (2) of the BGB, the payee’s consent to revocation is additionally required (section 675p (4) of the BGB).
What is the time limit for objecting to a debit transfer?
Execution of such a payment order normally requires the customer to grant consent to its own bank in the form of an authorisation (section 675j of the BGB); as provided in the debit agreement, consent is declared in advance for a direct debit order, a collection authorisation and a SEPA direct debit.
While a direct debit executed using a direct debit order cannot be revoked, customers may object to a collection authorisation or a SEPA basic direct debit up to eight weeks after the debit entry. The amount debited must then be credited to the account that was debited. However, the amount cannot be credited if the customer expressly authorised the bank to execute to debit transfer.
If the customer’s account was wrongly debited (as a result of an unauthorised or erroneously executed payment transaction), the customer must notify its bank of this without undue delay (section 675b (2) of the BGB). A wrongly debited amount will not be reimbursed if the customer has not asserted its claim within 13 months after its account was debited, provided that it received the information specified in Article 248 of the Introductory Act to sections 7, 10 and 14 of the German Civil Code (Einführungsgesetz zum BGB – EGBGB) when the debit transfer was made. The purpose of this information is to ensure reliable identification of the relevant payment order.
Why am I not permitted to use the equivalent value of a submitted cheque immediately?
Normally, a cheque amount is credited to the account of the person submitting it subject to the reservation of the cheque being honoured (indicated on the account statement by the addition of "e.V." or "Eingang vorbehalten" (subject to collection).
A credit entry subject to this reservation can be cancelled by way of chargeback if the cheque, rightly or wrongly, is not honoured. It is only when the equivalent value has been collected that the bank is under an obligation to make the amount of the cheque available to the party having submitted it and that such party has a "claim under the credited amount".
In this regard most banks provide for a "blocking period" exceeding the already applicable value dates (see question "With what value date is my bank required to credit cheques submitted to it?"). The purpose of the "blocking period" is to ensure that the customer can use the cheque’s equivalent value only when it is certain that the cheque has actually been honoured by the issuing party’s bank. The credit institution instructed to collect the amount may assume this to be the case only if a certain period has elapsed during which it has not received any notification that the cheque has not been honoured. Depending on the path taken by the cheque, this period may be as much as 10 business days.
In terms of interest accrued, the "blocking period" does not result in any disadvantages for the customer since the value date alone is decisive for the applicable interest.
With what value date is my bank required to credit incoming transfers?
The value applied is the value on the date when the amount has reached the customer’s bank (section 675t (1) of the German Civil Code (Bürgerliches Gesetzbuch – BGB)). This applies even if the amount has been credited only subsequently – for example due to disruptions in data processing.
As a rule, the bank may not depart from this rule to the detriment of the customer (section 675e (1) BGB); for exceptions see section 675e (2) sentence 2 and (3) BGB.
With what value date is my bank required to credit cheques submitted to it?
A value date period of three business days is permissible for domestic cheques and five days for foreign cheques (judgment of the Federal Court of Justice (Bundesgerichtshof) of 6 May 1997 – case ref. XI ZR 208/96).