The Problem:
A Missed Opportunity on E-Mandates
Direct debits allow a third party to withdraw funds from an individual’s or business account on agreed dates, provided prior authorization has been granted by the account holder. They are primarily used for recurring payments of variable or fixed amounts (e.g., mortgages, rent, utility bills, insurance premiums, and B2B invoices). Before SEPA integration, direct debit purchases were devious, requiring traditional paper-based mandates. The physical mandate form had to be signed and, in a B2B setting, sent to the issuing bank for registration. Verifying paper mandates took 3–5 business days, making the process costly and inefficient.
The Dutch e-Mandates were introduced 6–7 years ago as an enhancement of the SEPA Direct Debit (SDD) rulebook. By digitizing the bureaucratic processes for signing and verifying mandates, SDD e-Mandates streamlined payments and enabled rapid customer legitimacy verification.
E-Mandates were expected to replace physical mandates, reducing administrative burdens, improving security, and increasing efficiency for businesses and consumers. For businesses, this meant automating direct debit authorization, reducing fraud risks, and ensuring SEPA compliance. For consumers, it provided a seamless and secure way to authorize payments digitally. However, the market adoption of e-Mandates fell short of expectations, and uptake remains limited due to:
Partial Participation
Some smaller banks did not adopt the e-Mandate framework designed by the Dutch Payment Association, restricting its usability for merchants. As a result, customers whose banks do not support e-Mandates lack a viable digital alternative. This issue, known as “the coverage problem,” is discussed further below.
Complexity in B2B Transactions
B2B direct debits are final and irreversible once executed. As a result, B2B banks must verify the validity of mandates before processing a direct debit. This complexity has contributed to the early adoption of e-Mandates primarily in the B2B market.
The Coverage Problem
“The coverage problem” refers to the extent to which financial institutions support and process e-Mandates. Within SEPA, not all banks have integrated the necessary infrastructure to support e-Mandates, meaning businesses and consumers using non-supporting institutions cannot utilize e-Mandates as a digital authorization method. Two distinct e-Mandate types exist—CORE and B2B—each tailored to specific transaction and regulatory needs. The support of banks for both e-Mandate types is detailed in the chart below.
Currently, on the issuing side, only ABN AMRO, ASN, ING, Rabobank, Regiobank, SNS, and Triodos Bank support the CORE e-Mandate. This broader support for CORE e-Mandates is likely due to their lower risk and wider applicability for consumer transactions, whereas B2B e-Mandates, which are final and irreversible, require stricter verification procedures that not all banks have chosen to implement. For B2B e-Mandates, only ABN AMRO, ING, and Rabobank offer support. On the acquiring side, support is also inconsistent, making the product less attractive to merchants.
The lack of widespread bank support forces businesses to rely on manual, physical mandates, which are time-consuming and error-prone. Moreover, consumers banking with non-supporting institutions cannot digitally authorize payments, leading merchants to resort to insecure alternatives (e.g., informal email confirmations and one-cent payments), ultimately resulting in invalid mandates.
Our experience in fintech and regtech has revealed critical gaps in the current e-Mandate landscape. According to SEPA Rulebooks, a (digital) mandate may be an electronic document signed using a legally binding method of signature. However, the Dutch Payment Association only accepts:
-
A traditional paper-based mandate with a wet signature.
-
The official e-Mandate via the bank (“Digitaal Incassomachtigen”).
-
A digitally signed mandate via iDIN.
The limited acceptance of valid digital alternatives has encouraged the widespread use of “grey mandates”—unofficial digital mandate variants not recognized by banks or the Dutch Payment Association. Examples include authorization via an internet checkmark or a 1-cent iDEAL payment. Companies use grey mandates due to lower costs, reduced friction for customers, weak enforcement, and partial bank coverage. However, reliance on these unauthorized methods creates compliance and security risks.
Without changes, the coverage problem will persist, hindering adoption and innovation in digital direct debits. This could lead to continued reliance on inefficient manual processes, increased security risks, and limited scalability for businesses seeking streamlined payment solutions. Recognizing these challenges led to the development of a complementary solution to enhance the e-Mandate framework: the Green Mandate.
The Solution
The Green Mandate: What Is It?
The Green Mandate (GM) is a digitally signed direct debit mandate that offers enhanced security and broader applicability compared to existing digital mandate options. Unlike the official e-Mandate via banks or iDIN-signed mandates, the Green Mandate is designed to overcome the bank coverage issue by providing a universally accepted digital alternative for both consumers and businesses. Currently, three valid SEPA direct debit mandate options exist:
- Paper-based mandate (pencil-signed form)
- Digital mandate via the e-Mandate standard (“Incassomachtigen”)
- Digital mandate signed using iDIN
The Green Mandate enhances authentication and authorization beyond the traditional paper mandate. While it does not replace the e-Mandate standard established by the Dutch Payment Association, it serves as a more effective alternative than the current iDIN framework, which also suffers from the coverage problem.
With the Green Mandate, businesses and consumers banking with non-supporting institutions can still provide a validly signed digital direct debit mandate instead of relying on paper mandates. By addressing the coverage problem, the Green Mandate supports the broader adoption of compliant digital mandates, increasing efficiency and trust within the payment ecosystem. Expanding bank support for the Green Mandate will ensure a broader consumer base can securely authorize payments while increasing merchant confidence in e-Mandates.
Beyond improved security, full banking support for the Green Mandate would unlock operational efficiencies, streamline authorization, and reduce manual workload. Bluem’s solution is a crucial step toward making e-Mandates the default digital authorization method, benefiting businesses, consumers, and financial institutions alike.
The Green Mandate: How to Use It?
Both CORE and B2B Green Mandates comply with European legal requirements for valid digital signatures. These mandates incorporate robust digital identification and authentication processes, ensuring secure direct debit authorization. Merchants initiate Green Mandates for customers whose information they already possess. We designed two types of Green Mandate – CORE and B2B – to meet specific transaction and regulatory needs.
Signing a CORE Green Mandate
- Mandate Request: The creditor sends a unique CORE Green Mandate link to the debtor’s email.
- Bank Selection: The debtor selects their bank from a list of institutions supporting e-Mandates. If the debtor’s bank is not listed, they can choose the “Other Bank” option, redirecting them to the Green Mandate page.
- Green Mandate Form: The debtor reviews and completes a pre-filled digital mandate form, validating their home address.
- Identification and Authentication Steps:
-
- The debtor verifies their email by entering a code sent to their registered email address.
-
- A €0.01 iDEAL transaction is initiated to a dedicated Bluem account—not as a signature method, but to validate access to the designated bank account and ensure it belongs to the debtor.
-
- The name on the transaction is cross-checked with the mandate details to verify the debtor’s identity.
- Digital Signature: The debtor signs the mandate digitally using a secure signature interface.
- Confirmation and Audit Trail: Upon signing, the debtor receives a confirmation page and a Green Mandate PDF, including an audit trail and certificate of completion.
- Ongoing Verification: The validity of the signed mandate can be checked at any time by scanning the embedded QR code.
Signing a B2B Green Mandate
The B2B Green Mandate follows a similar digital workflow but includes additional identity verification steps due to the irreversible nature of B2B direct debits, where chargebacks are not possible.
- Mandate Request: A unique B2B Green Mandate link is sent to the debtor company’s registered email.
- Bank Selection: The debtor selects a supporting bank. If their bank is not listed, they are redirected to the Green Mandate page.
- Green Mandate Form: The debtor reviews and completes the pre-filled mandate form, which includes detailed SEPA mandate information.
- Identification and Authentication Steps:
-
- Email Verification: The debtor enters a code sent to their registered company email.
-
- IBAN Name Check: The debtor’s bank account name is validated to confirm it belongs to the debtor company.
-
- Identity Verification: The signee uploads an official ID document (passport, driver’s license, or ID card) for scanning and undergoes a liveness check.
-
- LinkedIn Cross-Check: The signee’s LinkedIn profile is checked to confirm their affiliation with the debtor company.
- Digital Signature: The authorized company representative signs the mandate digitally.
- Confirmation and Audit Trail: The signed B2B Green Mandate is shared with the debtor company, creditor, and issuing bank, including a certificate of completion.
- Ongoing Verification: The validity of the signed mandate can be checked at any time via the QR code on the Green Mandate PDF.
Key Takeaways
Enhancing Digital Mandate Adoption
The Green Mandate strengthens authorization and authentication measures beyond paper mandates. It is not a replacement for SEPA e-Mandates but an add-on designed to accelerate adoption by addressing the bank coverage issue. The Green Mandate provides a secure, transparent, and compliant alternative to unauthorized grey mandates.
CORE Green Mandate: Addressing Risks for All Stakeholders
For Merchants (Creditors):
- Reputation Protection: Avoids risks associated with using unrecognized grey mandates.
- Compliance & Security: Eliminates the Mandate Obligation Issue (MOI), ensuring valid authorization for direct debits.
- Regulatory Adherence: Prevents non-compliance concerns while maintaining access to high-value customer segments.
- Streamlined Process: Enables a single, streamlined digital mandate process for all clients.
For Banks:
- Risk Mitigation: Avoids reputational damage from processing unauthorized direct debits.
- Fraud Prevention: Reduces liability in case a merchant goes bankrupt.
- Compliance Assurance: Eliminates complicity in grey mandate transactions.
For Consumers:
- Standardization & Convenience: Provides a uniform digital authorization process instead of fragmented grey mandate methods.
- Security & Trust: Establishes the bank-driven Green Mandate process as the preferred method for CORE digital mandates.
B2B Green Mandate: A Game Changer for Business Payments
For Merchants (Creditors):
- Efficiency: Eliminates the burden of manually registering a paper mandate with the debtor’s bank.
- Streamlined Process: Enables a single, streamlined digital mandate process for all business clients.
For Banks:
- Reduced Workload: Reduces administrative workload associated with B2B mandate registrations.
- Adoption Encouragement: Encourages greater adoption of e-Mandates.
- Data Accuracy: Improves data accuracy compared to paper mandates.
For Business Clients:
- Simplification: Simplifies the mandate authorization process, making it quicker and easier.
Future-Proofing Mandate Authorization
The Green Mandate enhances interoperability, allowing for international adoption. It creates a fully digital, automated, and fraud-resistant mandate authorization process for both consumer and business transactions.