Direct Debits in Switzerland FAQ

Direct debit orders are a hassle-free solution for paying recurring bills. Direct debits let a company or individual draw money directly from your private account on an ongoing basis without having to request your approval each time. The third party is authorized to draw the exact amount owed. That makes direct debits very useful for paying bills which recur on a regular basis, but with different amounts owed. This could be the case with credit card, phone, and electricity bills, for example.

Here, independent online comparison service moneyland.ch answers key questions about using direct debits in Switzerland.

1. What kinds of direct debt orders are offered?

Private account holders in Switzerland use one of two Swiss direct debit order standards: LSV+ or Swiss Direct Debit. Both can be used to pay bills in Swiss francs (CHF) and euros (EUR).

• The LSV+ standard is the successor of the LSV standard. It allows account holders to dispute direct debits charged to their accounts. The LSV+ standard is used by all Swiss banks with the exception of Postfinance.
• The Swiss COR1 Direct Debit (CH-DD) is the direct debit standard used by Postfinance.

Some Swiss Banks also offer SEPA direct debit orders for the payment of recurring bills from companies in other European countries within the SEPA region.

Swiss business bank account holders can also make use of two additional direct debit order types: the BDD direct debit order without a dispute option (Business Direct Debit); and the Swiss B2B Direct Debit from Postfinance. These order types are not available to private account holders.

2. Can a company draw money from my account without a direct debit order?

No. Unlike direct debits in some other countries (Germany, for example), a third party cannot debit a Swiss bank account unless you set up a direct debit order at your bank. You, as the account holder, have to fill out a form which grants a specific third party the right to draw on your account.

Only after the bank has finished setting up the direct debit order can the company begin debiting your account directly. Once your bank has activated the direct debit order, the third party can charge your account on a recurring basis without having to get your permission every time.

The process is different for SEPA direct debits. Swiss banks that offer this service only allow the third party to draw money from your account after you accept a relevant agreement with your bank. Additionally, you also need to complete an agreement with the company which will be debiting your account.

3. What should you pay attention to when filling out direct debit order forms?

When you fill out a debit authorization form, you need to include the IBAN of your bank account.

Depending on the company and bank involved, you need to make sure that you have the correct debit authorization form. The form required if you use a postal account (Postfinance) is different to the form required if you use a bank account from other Swiss banks.

Many Swiss companies now have unified direct debit order forms which can be used for both standard and postal bank accounts.

4. Where do I send completed direct debit order forms?

If you are a Postfinance customer, you must send the CH-DD debit authorization form to the company which you authorize to debit your account. If you have an account at any other Swiss bank, the LSV+ debit authorization form must be sent to your bank (many companies handle this for you). A SEPA direct debit authorization form must be sent to the company which you are authorizing to debit your account.

5. Can I revoke individual charges?

Yes. The LSV+ orders used by Swiss banks, the CH-DD orders used by Postfinance, and SEPA direct debits all have the option of revoking individual debits by disputing the transaction with your bank. Once the bank has cancelled the transaction, the debited amount is reimbursed to your account.

Important: You can only dispute Swiss direct debits up to 30 days after your account is charged. SEPA direct debits must be disputed within 8 weeks of the transaction date.

In Switzerland, direct debits are rarely disputed: Less than one out of every 300 LSV+ transactions are cancelled.

You cannot dispute or revoke direct debits from business accounts. Neither the BDD (Business Direct Debit) standard from Swiss banks nor the B2B Direct Debit standard from Postfinance allow for cancellations.

6. Can I terminate a direct debit order?

Yes. If you no longer want a third party to be able to automatically debit your account, you can have your bank terminate the direct debit order. Some banks give you the option of terminating direct debit orders via online banking.

If you have been using a direct debit order to pay a recurring bill, make sure to contact your creditor and have them switch to sending you QR-bills or eBills.

7. Can I complete debit authorization forms electronically?

In Switzerland, debit authorization forms must be signed by hand. This makes sense because when you submit a direct debit order to your bank, you are effectively granting a third party full access to the money in your account. SEPA direct debit orders can, in some cases, be created electronically.

8. What happens if I change bank accounts?

When you close your old bank account, all existing direct debit orders will be cancelled. You have to submit new debit authorization forms for your new account.

9. Which banks offer direct debit orders?

Practically all Swiss banks offer LSV+ direct debit orders. Postfinance offers direct debit orders based on its own CH-DD standard.

Only a few Swiss banks offer their customers SEPA direct debits. These banks include Postfinance, Raiffeisen, UBS und some cantonal banks. Many other banks, including major banks like Bank Cler, Migros Bank, Valiant, and the Zürcher Kantonalbank, do not offer SEPA direct debits.

10. How popular are direct debits in Switzerland?

Direct debit orders are not widely used in Switzerland. Only around 4% of all billing is done using direct debits. That translates into around 67 million transactions per year.

The use of direct debits for international transactions is marginal. In 2019, only around 30,000 international transactions were performed using direct debits.

Direct debits are much more popular in some other countries. In Germany, for example, almost half of all bills are paid for using direct debit orders.

11. What are the advantages of direct debits?

From a consumer perspective, the primary advantage of direct debit orders is convenience. If you have a lot of recurring bills, direct debit orders free you from having to pay each bill over and over again because your bills are paid right out of your bank account automatically.

You also reduce the risk of making mistakes because you do not have to repeatedly enter payment information.

Not having to keep track of bill payments is another advantage. Because bills are paid automatically, you do not risk missing a payment. This eliminates the risks of late-payment penalties and debt collection cases. For example, many people in Switzerland forget to pay their credit card bill on time, and then get upset when they are charged penalty fees. Setting up a direct debit order for your credit card bill prevents that from happening.

Another possible benefit of direct debit orders is that your money is normally only debited from your account on the exact day on which the payment is due. This ensures that you earn interest on your money for as long as possible.

12. What are the disadvantages of direct debits?

Having money debited directly from your account can be a disadvantage, especially if bills are debited when you do not expect it. The fact that incorrect bills can be automatically debited from your account is also problematic. For these reasons, it is important that you only grant direct debit authorizations to companies which you fully trust.

If you use direct debit orders, take time to review your bank account transactions regularly. If an incorrect amount is debited, make sure to file a dispute claim with your bank within 30 days of the transaction.

13. Are there alternatives to direct debits?

For recurring bills on which the amount payable is always exactly the same, standing orders are a good alternative to direct debit orders. When you set up a standing order, you instruct your bank to transfer a certain amount to a specific account at predetermined intervals. Payments are then made automatically at the selected time of month or year, until you terminate the standing order. An advantage of standing orders over direct debit orders is that you do not have to give the third party access to your bank account.

eBills are another alternative for streamlining payments. With eBills, you have to confirm each bill payment individually before it is charged to your account. This gives you more control over payments.

But if you prefer not to confirm each bill payment individually, eBills have the option of activating a permanent confirmation for a recurring bill.

More on this topic:
Swiss private account comparison
Instant payments: Real-time bank transfers explained
eBill FAQ
QR-bill FAQ