SEPA Direct Debit – A Quick Overview 20

Similar to the SEPA Credit Transfer post – for direct debits though, there has been a particular emphasis in the last few months on SEPA direct debits (SDD). This wealth of information being released is probably due a combination of the very low take up of SEPA direct debits (total percentage of SEPA direct debits in euro-zone is 2.1% – source: ECB – European Central Bank), and the realisation amongst corporates that time is running out. Another hindering factor for SEPA direct debit implementations is that they are complicated!

SEPA Direct Debit – In a nutshell…

  • A SEPA Direct Debit is a payment instrument for collections in euro within the Single European Payments Area (SEPA), from bank accounts that have been designated to accept collections
  • Collections are based on an authorisation given to the corporate (creditor) by the customer (debtor) – the autorisation is called the ‘Mandate‘.
  • With SEPA Direct Debit, the Mandate has been standardised across the SEPA and must be:
    • In the language of the debtor
    • Signed by the debtor and presented to the creditor (as a minimum)
  • Debtor and creditor must each hold an account with a bank participating within the SEPA Direct Debit scheme
  • There are 2 SEPA Direct Debit schemes
    • Core
    • B2B – Business to Business
  • BIC / IBAN bank information will replace the legacy bank routing / sort code and customer bank account number
  • The file should be delivered to the bank in the SEPA ISO XML direct debit format (PAIN.008)

SEPA Direct Debit Resources:

Besides SEPA for Corporates of course ;-) , the European Payments Council (EPC) website is a must, although the amount of information can be overwhelming. Following are the links i found helpful:

Both Core and B2B links provide information the Rulebook and Implementation Guidelines.

I think that will do for now, more information about the SEPA Direct Debit schemes soon…!

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20 thoughts on “SEPA Direct Debit – A Quick Overview

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  2. Reply R Jan 12, 2014 11:13 pm

    What does “signed” mean?

    • Reply SEPA-for-Corporates Jan 14, 2014 9:17 pm

      Hi,

      Signed in this case refers to a physical signature. Yep, it means the customer needs to put pen to paper, just like the old days. Since this is an agreement/mandate between the creditor and debtor the signature confirms agreement by both parties to adhere to the rules of the scheme. Hope that helps.

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  11. Reply Alexandra Jun 6, 2014 7:44 am

    Hello,

    Can you explain to me how a legal person choose between Core Scheme and B2B? As far as I know, business customers can also use B2B Scheme if they like. Thank You!

    • Reply SEPA-for-Corporates Jun 17, 2014 12:10 am

      Hi Alexandra,

      Check out my post Difference Between SEPA CORE and B2B Schemes - this will help you understand the difference between the 2 schemes and which you should consider. If you’re already collecting under a legacy scheme the migration to CORE is relatively straightforward. B2B is a bit more complex and requires new mandates and for your customer to notify their bank and enable B2B processing at their bank. I’m assuming the customers bank is participating and able to collect under the B2B scheme.

      I hope that helps!

      Best Regards – SEPA for Corporates

  12. Reply Alexandra Jun 6, 2014 7:45 am

    As far as I know, business customers can also use CORE Scheme* if they like.

    • Reply SEPA-for-Corporates Jun 17, 2014 12:04 am

      Hi Alexandra,

      You’re right, business customers can use either B2B or the CORE scheme. The important consideration is to keep your customer informed, and if you decide to use the B2B to ensure new mandates are signed and the bank accounts are B2B enabled.

      Good luck!

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