Direct Debit

The term direct debit denotes an order by which a bank account holder grants a third party the right to draw on their bank account. In Switzerland, a standard direct debit order is referred to as an LSV. With the exception of PostFinance, Swiss banks now offer the LSV+ standard which allows the account holder to dispute direct debit transactions. PostFinance uses its own Swiss Direct Debit (CH-DD) standard for direct debit orders.

To set up a direct debit order, the bank account holder must complete and sign a debit authorization form which grants a specified third party the right to debit money directly from their account on an ongoing basis. Once the direct debit has been set up, transactions are handled by the third party and the bank, with no need for further involvement on the part of the account holder.

The absence of recurring involvement makes direct debits a practical solution for paying recurring bills. This is especially true for variable bills such as phone, power and credit card bills because the biller can debit the exact amount owed each billing period. A standing order, on the other hand, has a fixed transaction amount which must be changed manually, so it is best suited to non-variable recurring transactions.

A significant disadvantage of direct debits compared to eBills or QR-bills is that you do not have a chance to approve or reject bills before they are charged to your account. However, both the LSV+ and the CH-DD direct debit standards give you the option of disputing debits within 30 days of the transaction date.

Swiss banks generally do not charge any fees for direct debits from private accounts.

More on this topic:
Direct debits in Switzerland FAQ

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