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SEPA DIRECT DEBIT

SEPA payments area

The SEPA direct debit mandate makes billing and payment easy, comfortable and seamless in countries in the euro monetary zone which participate in the SEPA direct debit mandate. The payer must authorize the mandate for the payment to take place. SEPA is an abbreviation for the “single euro payments area”.

European Payments Council

The European Payments Council (EPC) is an international not-for-profit association which represents payment service providers (PSPs) on all European payment issues. It is not part of the European Union institutional framework. Its main task is to manage the four SEPA payment schemes, SEPA Credit Transfer, SEPA Instant Credit Transfer, SEPA Direct Debit Core and SEPA Direct Debit Business-to-Business.

SEPA direct debit mandate

Before a business can withdraw the money from a customer’s account, they are required to acquire a SEPA direct debit mandate. The customer enters their information into the mandate, including their IBAN number. When the payment is cross-border, the customer must also include their BIC. The customer can also specify in the mandate if the payment should be processed as a one time payment or if it will be recurring. The customer authorizes the provider to process the payment and withdraw the money from their bank with a signature.

Creditor identifier

Every company or institution working with SEPA Direct Debit needs to get a creditor ID (CI). This CI identifies a creditor independently from its relationship with any creditor bank.  The CI is a standardised, unchanging and unique to each creditor. The general structure of a CI is composed of the country code, followed by two check digits, a three-digits creditor business code and a national identifier.

Reference number

Every SEPA direct debit mandate has a unique mandate reference number (e.g. a consecutive number) issued by the payment recipient. This reference number has to be provided for all SEPA direct debits. Combining this number together with the identification number of the person paying the direct debit (the creditor identifier) ensures that each mandate has a unique identifier. Both of these numbers will be shown in the account statements.

SEPA fees

A difference between the previous debit authorization is the cost of the reimbursement of the debit. The paying authority takes an amount that depends on the incurred costs, while the collection agent bills an amount in relation to the specifications of service. The business must settle the combined costs and cover the cost of the billed amount themselves.

SEPA countries

The SEPA space includes the countries in the following image. SEPA transfers and direct debits are always conducted in EUROS. That means that countries who participate but have other currencies beside the euro must still be able to transfer the money or process the direct debit only in euros.

SEPA Countries

Payment deadlines

Due to legally established payment deadlines, the customer and the businesses both have high security planning. The customer knows when his account will be debited for the amount and the business can plan for the inflow of their liquidity. Within SEPA direct debit, there is SEPA Core direct debit and SEPA for businesses. The SEPA Core direct debit is used by private customers. The customer is able to request a refund up to eight weeks after the transaction without a reason.SEPA for businesses is used by companies and businesses. Businesses may not attempt to reclaim the paid amounts after the transaction is completed.

SEPA Core direct debit

Within SEPA direct debit, there is SEPA Core direct debit and SEPA for businesses. The SEPA Core direct debit is used by private customers. The customer is able to request a refund up to eight weeks after the transaction without a reason. SEPA for businesses is used by companies and businesses. Businesses may not attempt to reclaim the paid amounts after the transaction is completed.

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