General information

The SEPA Direct Debit (or “SDD”) allows a creditor (merchant) to collect an amount owed directly from the debtor’s (customer’s) account. It is primarily intended for recurring payments (subscriptions or installment payments) but may, in certain cases, be used for one-time payments (for example, to settle invoices between businesses).

Since it is issued at the creditor’s initiative, it requires prior authorization from the debtor. The merchant therefore prepares a “SEPA Direct Debit Mandate” specifying the terms of the direct debit and the bank details of both parties, which the debtor must sign.

1. The two types of SEPA direct debits

There are two types of SEPA direct debits:

• The SEPA “CORE” direct debit: the most widely used type, it allows creditors to debit the accounts of both individuals and legal entities. The SEPA direct debit mandate is drawn up and signed by both parties without any specific restrictions. However, the debtor is protected and may dispute a CORE direct debit with their bank within 8 weeks without providing a reason.
• The SEPA “B2B” direct debit: reserved for direct debits between businesses. The SEPA direct debit mandate is printed, signed, and then must be submitted by the debtor to their bank. The onboarding process thus requires significant action on the part of the debtor and validation by their bank. However, direct debits initiated using this type of mandate cannot be disputed.
  CentralPay does not offer this “B2B” SEPA direct debit service

2. Risks of rejections and contests

Since the SEPA Direct Debit is a payment method in which transactions are initiated without strong customer authentication, the risks of rejections and disputes must be taken into account.

👉 See the “R-Transaction SDD” section to learn more about SDD rejections and disputes

3. Important information

• The SEPA Direct Debit can be used with the vast majority of “checking” accounts in SEPA countries and some in the European Economic Area outside the SEPA zone. This depends on the connectivity of the payees’ banks to the SEPA networks. Special accounts, such as “savings accounts,” are not accessible.
• SEPA transactions are processed in euros (€) only
• SEPA transactions are processed on business days only (excluding weekends and holidays). As a result, the time it takes for funds to be received ranges from 2 to 5 days from the date the transaction is initiated.
• The creditor must notify the debtor of upcoming debits at least 14 days in advance, either by sending a payment schedule, a notice, or an invoice
• A SEPA direct debit mandate is valid for 36 months after the last transaction processed under that mandate
• In the case of a SEPA direct debit from a business’s (legal entity’s) bank account, the creditor must ensure that the SEPA direct debit mandate is addressed to and signed by the executive or an authorized representative (manager, accounting department, etc.).
• The SEPA Direct Debit is particularly well-suited for recurring transactions ranging from 20 to 200 EUR for individual payers and from 20 to 2,000 EUR for corporate payers