SlimPay has obtained authorization from the French regulator (ACPR) to operate as a payment institution (under art. L.522-1 of the French monetary code). Contrary to banks (whose activities are described in art. L. 511-1), payment institutions cannot provide overdraft credits on their clients’ accounts. In other words, the balance on a SlimPay payment account must always be positive.
When you debit your customers based on SEPA mandates, the debtor (or the debtor’s bank) can challenge a payment (refunds, returns) or the direct debit may fail for technical reasons (rejects). We refer to these cases as "R-Transactions".
The time frame of these operations (rejects, returns, refunds) depends on the execution date of the transaction (date D = date of execution of the SEPA direct debit).
Rejects and returns can occur until the 5th business day after D (the execution date), while refund requests from the debtor can be submitted up to 13 months following date D.
These R-Transactions reduce the available funds on your payment account, presenting the risk of a negative balance.
To mitigate the risk of overdraft, SlimPay requires its clients to keep a Reserve on their payment account.
Your Reserve consists of a fixed amount (Fixed Reserve) and a variable amount (Variable Reserve).
What is the Variable Reserve?
The Variable Reserve is a percentage of each transaction which is executed between the business period [D; D+5]. This Reserve aims at covering possible Rejects (technical issues) or Returns (often caused by insufficient funds on the debtor’s account, code AM04).
As its name suggests, the Variable Reserve is dynamic: during the 5 business days after D, the total amount of the SEPA direct debit is gradually released on your payment account until it reaches the whole amount of the transaction at D+5 (unless the transaction is returned or rejected).
What is the Fixed Reserve?
As its name suggests, the Fixed Reserve is a fixed amount blocked on your payment account to cover the risk of Refunds (most commonly when a debtor disputes a transaction, code MD06) that may occur until the 13th month after D.
If you terminate your SlimPay contract, your payment account shall remain operational to cover Refund requests related to the last executed SEPA direct debits. Therefore, your account cannot be closed as long as SlimPay is exposed to Reversed Transactions risks.
In practice, how does this work? In case of termination, a minimum amount is blocked by SlimPay on your payment account for 13 months after the execution of your last SEPA direct debit. If after this period the available balance on your account is positive, the amount is unblocked, and you can recover it.
Example: The fixed reserve amount is defined during onboarding phase and it is stated in the merchant’s contract. The amount can change during your activity, in which case you will be informed by our Compliance team.
(the amount of 600€ is an example)
How is the Reserve calculated?
The Reserve depends on the volume, amount and frequency of the payment orders and takes also into account the Reversed Transactions rate (in particular, the rate of Returns and Rejects for the Variable Reserve and rate of Refunds for the Fixed Reserve). Thus, the Reserve can vary according to the payment orders acquired on your payment account.
Considering these regulatory restrictions, SlimPay reserves the right to modify your Reserve if it no longer suits your creditor profile. Our Compliance team will naturally notify you of such changes on a real-time basis. You can consult your available balance and reserve using the Dashboard, and our Compliance team is always available to find the solution that best suits your needs.
The Reserve only covers potential R-Transactions and cannot be used to make refunds initiated by the merchant. In fact, to be able to make a refund, you must have funds available on your account that go beyond your reserve.