Overview

When you submit SEPA payments through DEFT, occasionally a payment will be rejected or returned by the bank. This guide explains what SEPA rejection codes mean, why payments fail, and how to resolve the issue so your payment can go through.

Understanding rejection codes helps you fix the underlying problem quickly and avoid payment delays.

What is a SEPA rejection?

A SEPA rejection occurs when a bank or payment system declines a payment instruction before it’s collected from the customer’s account. Common reasons include invalid account details, missing payment authorisation, or insufficient funds.

When a rejection happens, DEFT receives an error code from the bank that explains why. This article helps you understand and resolve the most common codes.

Common SEPA rejection codes

Account-related rejections

AC01: Invalid IBAN

What it means: The bank account number (IBAN) you’ve provided is incorrectly formatted or doesn’t exist.

Why it happens: - The IBAN was typed incorrectly - The account has been closed - The IBAN format is wrong (Irish IBANs must be 22 characters starting with IE)

How to resolve it:

1. Verify the IBAN against your customer’s bank statement or ask them to confirm it
2. Check the format: Irish IBANs should look like IE94BOFI90000112345678 (no spaces)
3. In DEFT, navigate to Payment Details and correct the IBAN
4. Try the payment again

AC04: Account closed

What it means: The customer’s bank account has been closed since the last successful payment.

Why it happens: - The customer closed their account - The bank closed the account due to inactivity or fraud - The account details are outdated

How to resolve it:

1. Contact the customer and ask them to confirm their current bank account details
2. If they’ve switched banks, get their new IBAN
3. Update the account details in DEFT
4. Resubmit the payment with the new account information

AC06: Account blocked

What it means: The bank account has been frozen or restricted, usually due to legal action or fraud suspicion.

Why it happens: - A court order is in place - Fraud has been suspected or reported - The account holder has requested a freeze

How to resolve it:

1. Contact the customer to inform them of the rejection
2. Ask them to contact their bank directly to resolve the block
3. Once the customer’s bank confirms the account is unblocked, resubmit the payment in DEFT

AC13: Consumer account for commercial use

What it means: The account is registered as a personal (consumer) account, but you’re trying to make a commercial payment to it.

Why it happens: - The customer provided a personal account number for a business payment - The account was set up as a personal account but is being used for business

How to resolve it:

1. Contact the customer and explain that SEPA payments require a business account
2. Ask them to provide a business account IBAN instead
3. Update the account details in DEFT
4. Resubmit the payment

AG01: Account forbidden for direct debit

What it means: The account type doesn’t accept direct debit payments (for example, a savings account).

Why it happens: - The customer provided a savings account instead of a current account - The account has been restricted by the bank

How to resolve it:

1. Contact the customer and ask for their current account IBAN instead of their savings account
2. Verify the new IBAN with them
3. Update the account details in DEFT
4. Resubmit the payment

Mandate and authorisation rejections

MD01: No valid mandate

What it means: There is no active payment authorisation (mandate) on file for the customer’s account.

Why it happens: - The customer hasn’t authorised you to collect payment from their account - The mandate has expired - The mandate was cancelled

How to resolve it:

1. Create a new SEPA mandate with the customer
   • Ask them to complete a mandate form authorising you to collect payment
   • This must be signed by the account holder
2. Submit the new mandate to the bank
3. Wait for the bank to activate it (usually 1–2 working days)
4. Once activated, resubmit the payment in DEFT

MD02: Missing mandatory mandate information

What it means: The payment mandate is incomplete. Required information (such as the customer’s name, address, or account details) is missing.

Why it happens: - The mandate form wasn’t filled out completely - Information is missing from DEFT’s record - The customer’s details don’t match the mandate

How to resolve it:

1. In DEFT, check the customer’s record for missing information:
   • Full name (must match the bank account holder)
   • Complete address
   • Valid IBAN
2. Fill in any missing information
3. Verify the details match the customer’s bank records
4. Resubmit the payment

MD07: Debtor deceased

What it means: The bank has flagged that the account holder is deceased, and the account cannot be used for new payments.

Why it happens: - The bank was notified of the account holder’s death - The account is frozen pending estate administration

How to resolve it:

1. Remove the customer from your active payroll or supplier list
2. Contact the customer’s estate representative or next of kin if applicable
3. Do not attempt to resubmit payments to this account

Payment amount and duplicate rejections

AM04: Insufficient funds

What it means: The customer’s account doesn’t have enough money to cover the payment.

Why it happens: - The customer’s account balance is too low - Another payment has reduced their balance - The customer has a spending limit set by their bank

How to resolve it:

1. Inform the customer of the payment amount
2. Ask them to deposit funds into their account
3. Request they contact their bank if there’s a spending limit in place
4. Resubmit the payment once funds are available

AM05: Duplicate collection

What it means: DEFT has detected an identical payment that was already submitted. This prevents duplicate charges.

Why it happens: - The payment was submitted twice by mistake - A previous submission is still being processed

How to resolve it:

1. Check your DEFT payment history to see if this payment has already been submitted
2. If it has been submitted successfully, do not resubmit
3. If the previous submission failed for another reason, correct that issue and resubmit as a new payment
4. If unsure, contact your bank to confirm whether the payment has already been collected

Creditor and regulatory rejections

BE05: Creditor Identifier incorrect

What it means: Your business creditor identifier (the reference that identifies you to the bank) is incorrect or has changed without your bank being notified.

Why it happens: - Your business details have changed - Your creditor ID was updated in ROS but not in DEFT - Your ROS certificate has expired or been revoked

How to resolve it:

1. Log in to your Revenue Online Service (ROS) account
2. Verify your creditor identifier is current and correct
3. Ensure your ROS certificate is valid and hasn’t expired
4. In DEFT, go to Settings > Certificates and verify your certificate details match ROS
5. If changes were made, update DEFT with the correct information
6. Resubmit the payment

RR01–RR04: Missing regulatory information

What it means: Required regulatory information is missing, incomplete, or incorrect. This could be your IBAN, the customer’s name, address, or your creditor details.

Why it happens: - A field in the payment record wasn’t filled in - Information doesn’t match the bank’s records - Data was entered incorrectly

How to resolve it:

1. In DEFT, open the payment record
2. Check and complete all required fields:
   • Your business name and creditor identifier
   • Customer name (must match bank account holder)
   • Customer address
   • Customer IBAN
   • Payment amount and date
3. Verify all information matches your records and the customer’s bank details
4. Resubmit the payment

SL01: Debtor-invoked service

What it means: The customer has requested their bank to block or restrict payments to you, or they’ve set limits on the amount or frequency of payments.

Why it happens: - The customer has asked their bank to block payments to your creditor ID - The customer has set a maximum transaction limit that your payment exceeds - The customer has restricted payments for the current time period

How to resolve it:

1. Contact the customer and explain the rejection
2. Ask them to contact their bank to lift the restriction or increase their limit
3. Once the customer has confirmed the restriction is removed, resubmit the payment in DEFT

Understanding who is responsible

Best practices to avoid rejections

• Keep account details current – Ask customers to confirm their IBAN annually
• Create proper mandates – Ensure you have valid SEPA mandates on file before submitting payments
• Verify information before submission – Double-check names, IBANs, and addresses match customer records
• Monitor rejections – Review rejection reports in DEFT regularly and fix issues promptly
• Communicate with customers – Notify customers of payment failures quickly so they can help resolve them

Resubmitting after a rejection

Once you’ve resolved the underlying issue:

1. In DEFT, navigate to Payments > Failed Payments (or similar)
2. Select the rejected payment
3. Click Resubmit or Retry Payment
4. DEFT will send the corrected payment to the bank

Do not manually create a duplicate payment—use the resubmit function to ensure DEFT tracks the correct payment.

Timeline for rejections

Don’t wait until the deadline to resubmit—fix the issue and try again as soon as possible.

Frequently asked questions

Q: How long does it take for a rejected payment to show in DEFT? A: Usually within 1–2 working days. Some rejections may take up to 5 days depending on the bank.

Q: Can I appeal a rejection? A: No, rejections are determined by the bank or payment system. If you believe the rejection is in error, contact your bank to ask them to reconsider.

Q: What if the customer says they never authorised me to take payment? A: If there’s a dispute about the mandate, contact your bank. The customer may have a right to a refund under SEPA rules.

Q: How many times can I resubmit a rejected payment? A: You can resubmit as many times as needed, but only after fixing the underlying issue. Resubmitting without changes will just result in another rejection.

Q: Will a rejection affect my business credit? A: No, rejections are technical issues between you and the bank. They don’t appear on credit reports.

Q: What if I receive the same rejection code repeatedly? A: There may be a systematic issue. Contact Bright Support with details of the rejection and the steps you’ve taken to resolve it.