Permitted by SEPA regulations in all countries within the same zone, SEPA Direct Debits offer the advantage of enabling the collection of regular or one-off amounts directly from your clients’ accounts through the signing of a valid mandate. This payment method accelerates the collection of direct debits, simplifies administrative processes, reduces the risk of error, and improves visibility over cash-flow.
In this article, our experts will explain what a SEPA direct debit is, its advantages, in which cases it might be useful to offer them to your clients and how to practically implement this in your organization.
The SEPA Direct Debit (SDD) allows the creditor to perform one-off or recurring euro debit operations on their clients’ accounts in all countries within the SEPA zone.
These operations are permitted based on a direct debit mandate signed by the debtor, simply by indicating the unique mandate reference number (RUM). The international bank account number (IBAN) and bank identifier code (BIC) can also optionally be provided.
The SEPA Direct Debit exempts the creditor from sending a payment title for each settlement or recurring operation deadline since it has explicit consent to directly debit the due amount from the bank account.
There are two types of SEPA direct debits. Both are intended to replace “classic” domestic domiciliations as we have known them before 2010.
The SEPA Core Direct Debit is suitable for all customers, in both B2C and B2B.
The SEPA Business To Business Direct Debit is exclusively intended for payments between companies, organizations and professionals, under specific conditions.
SEPA Direct Debit operations are possible throughout the SEPA zone (link to the blog article), which currently includes 36 countries and benefits from broad geographic coverage.
This includes:
For Issuing Companies, Organizations & Administrations:
For Clients:
In simplified terms, it’s necessary first to ensure that both banks can process SDD debits. Then, the creditor has the debtor sign a valid SEPA direct debit mandate. Once this step is completed, the creditor sends a pre-notification before any first debit with a 14-day notice period. After that, the debit can occur automatically. Finally, the creditor must keep (or have kept by a third party) all the mandates in place to ensure their proper management until expiry.
Every business that is requesting recurring payments are usually the best case for SDD. Especially if the payment collection is done every month, weeks, etc. Most common business are the Telecom, the Utilities (energy, water, etc), the companies offering online payment services.
SEPA direct debits are certainly the safest way to be paid on time and regularly. However, it is necessary to ensure that the SEPA mandate authorizing the debits is valid and confirmed. If the debtor disputes a Core debit during the first 8 weeks, the debit will be canceled by the bank, no questions asked. He can also do so within 13 months, but only if the operation was erroneous or not authorized.
Each SEPA direct debit must at least include the following information:
The unique mandate reference (RUM) to identify each debit & the payment status:
The mandate signing date.
To set up SDD debits, you must:
This process assumes possessing sufficient technical and organizational expertise to establish valid and secure SEPA mandates, to archive them, to collect, record and transmit payment orders to banks.
Processing SEPA Direct Debits with Digiteal can greatly simplify the setup and operations.
Digiteal’s processing is particularly advantageous in the following circumstances:
Digiteal provides this service at a competitive price. Contact us to get the details.
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