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SEPA Direct Debit

As of November 2016, SEPA Direct Debit is a Europe-wide direct debit system that allows merchants to collect euro-denominated payments across accounts in all the 34 countries and territories within the SEPA area (all 28 EU member states plus Iceland, Liechtenstein, Norway, Switzerland, Monaco, and San Marino). In countries that have implemented SEPA, similar to SEPA Credit Transfer and SEPA Instant Credit Transfer all euro-denominated payments must be collected via the SEPA payment scheme, and becoming SEPA compliant is a must for operators doing business in Europe. Transact24 can help—our team of SEPA experts has a proven record of getting businesses like yours on track and operating smoothly within the SEPA system.

SEPA Direct Debit Basics

  •  SEPA Direct Debit is pull-based. This means that all payments are initiated by merchants once customers have agreed to debit payments.
  •  All SEPA Direct Debit payments are bank to bank. Thus, there are no card networks involved in the SEPA Direct Debit system, and all communications are bank-to-bank direct.
  •  All SEPA Direct Debit transactions are in euros, regardless of the individual account currency denominations; currency exchange is the responsibility of the payer’s and merchant’s banks.
  •  Payers in the SEPA Direct Debit system are entitled to refunds of unauthorised debit payments for a period of up to 13 months.
  •  As all SEPA Direct Debit payments are customer-initiated, merchants are required to have a customer’s BIC and IBAN numbers to collect payments.
  •  Businesses and consumers may be treated differently, according to the terms and conditions of either of the two SEPA Direct Debit Schemes.

SEPA Direct Debit – Two Schemes

The SEPA Direct Debit system consists of two separate schemes: SEPA Core Direct Debit and SEPA B2B (business to business) Direct Debit. The Core scheme is the mandatory debit scheme required of all banks conducting euro-denominated direct debit transactions, while the B2B scheme is specifically utilised for direct debit payments between businesses, and may not be offered by all banks operating in the SEPA area.

For businesses operating in the SEPA area, there are factors to consider when choosing which SEPA Direct Debit scheme is right for you. The unique needs of each individual business should be weighed against a few key factors:

From whom will your business be collecting payments?

If your business expects to be collecting payments from individual consumers or microenterprises, you will need to use the SEPA Core scheme, as it is available for all payers—the B2B scheme is strictly to be used for business-to-business transactions only.

What level of indemnity claim protection is right for you?

The SEPA B2B scheme does not entitle customers to refunds of authorised transactions. Refunds for unauthorised transactions are only possible if the payer can prove that it did not agree to a B2B payment mandate, and are subject to a 13-month time limit from the date of the debit in question.

Which payment timeline is best for you?

The SEPA B2B debit scheme offer a shorter timeline for payment submission (1 day before collection), as well as faster response times from banks in the event of a technical failure or other inability to realise the collection (2 days after collection date).

SEPA Direct Debits are now the standard for businesses operating across borders in the SEPA area, and SEPA compliance is a must for businesses who wish to navigate the wider European market efficiently and successfully. SEPA guidelines allow for cheap and easy transfers, and understanding these guidelines is crucial to operating within the SEPA area. Transact24 has a team of direct debit specialists that can handle your collection processes on your behalf, and we also offer an easy-to-use platform where merchants can manage collections and payments themselves. To learn more about SEPA Direct Debits and making SEPA work for your business, contact Transact24 today.

Find Out More About SEPA from Transact24

If you are selling into or within the Euro-zone, and would like to enjoy the many SEPA benefits, SEPA payments are an opportunity for your business. The positive impact on cash flow and cash management arrangements is significant.

Transact24 offers extensive SEPA expertise and can help your business to:

  •  Implement SEPA Payment types
  •  Streamline payments
  •  Improve your liquidity management
Getting started with SEPA payments is simple. Just drop us a line using our contact form and we’ll be in touch to get the ball rolling.