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:
- The EPC – Overview of SEPA Direct Debit
- This tells you about the SEPA Direct Debit Core and B2B Schemes, as well as the usual blurb highlighting the benefits of the schemes
- The EPC page about the SEPA Direct Debit Core Scheme
- The EPC page with details of the SEPA Direct Debit B2B Scheme
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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What does “signed” mean?
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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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!
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
As far as I know, business customers can also use CORE Scheme* if they like.
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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