Everything you need to know about SEPA direct debit

Everything you need to know about SEPA direct debit

SEPA direct debit, direct debit mandate, standing order mandate… What does all of this actually mean?

In this article, we provide you with answers to the most relevant questions about paying with the SEPA direct debit scheme.

What does SEPA mean?

SEPA is an abbreviation and stands for Single Euro Payments Area. Since February 1, 2016, this has been a unified payments area in Europe that makes cross-border payments in euros easier and more cost-effective.

What is a SEPA direct debit in general?

A SEPA direct debit is an electronic payment instrument that allows money to be transferred from one bank account to another within the SEPA area.

This procedure can be used by companies, organizations, and consumers who have a bank account in the SEPA area.

There are different types of SEPA direct debit:

Consumers use the SEPA Core Direct Debit. The payer has a refund claim of eight weeks. If the payer is not a private individual but, for example, a company, you can use the SEPA B2B Direct Debit.

An advantage of the direct debit procedure is that those making payments do not have to initiate a transfer themselves each time; instead, the corresponding amount is automatically debited from their account. This is very practical for recurring payments (e.g., mobile phone bills or subscriptions).

You also always pay on time. There are fixed due dates for direct debits. Direct debit payments are traceable because the payee must always provide the mandate reference (MR) and the creditor identification number (CI).

What is the difference from a bank transfer?

Unlike a transfer, with a direct debit the payee initiates the debiting of the amount due—not you as the payer.

So how do I pay by SEPA direct debit?

Before a SEPA direct debit can be carried out, the payee must obtain a mandate from the payer. The mandate is an authorized agreement that allows the payee to debit money from the payer’s account.

The mandate must contain certain information, such as the name of the payee, creditor identification number (CI), mandate reference, the customer’s date, the name of the remitter’s bank, as well as the remitter’s IBAN.

Such a mandate can be issued for one-time or recurring payments and can be revoked at any time. Please note: A mandate automatically expires if more than 36 months have passed since your last debit.

How long does a SEPA direct debit take?

The SEPA direct debit procedure is not an instant payment method. In the B2B direct debit procedure it takes at least 2 interbank business days and in the Core direct debit procedure at least 3 interbank business days until payments are credited to your bank account or will be.

Can a SEPA direct debit payment be reversed?

The “right to unconditional refund” applies to a SEPA direct debit. Specifically, this means that after an amount of money has been debited via the direct debit procedure, you can reclaim your money within eight weeks. No reasons need to be given for this.

To do so, you contact your bank and instruct them to reverse the booking. If you also no longer want a certain payee to debit by direct debit in the future, you should also cancel the SEPA direct debit mandate at the same time.

Are you currently looking for a way to organize your SEPA direct debit mandates more efficiently in your daily work? Then discover millio—the Salesforce-native online banking app.

With millio, you can also manage your direct debit collection directly in Salesforce. Curious? Then find out more here.