SEPA Direct Debit (SDD)



The International Bank Account Number (IBAN) and the Business Identifier Code (BIC) allow the identification of any account in the 34 Single Euro Payments Area (SEPA) countries. These technical standards were developed by the International Organization for Standardization (ISO). The IBAN is ISO standard 13616; the BIC is ISO standard 9362. For more information see The European Payments Council (EPC) video animation 'IBAN - Your New Best Friend' (see links below) demonstrates how easy it is to use IBAN and BIC when making payments.

SEPA Regulation defines use of IBAN and BIC by payers and payees

In February 2012, the European Union (EU) co-legislators, i.e. the European Parliament and the Council of the EU representing EU governments, adopted the 'Regulation (EU) No 260/2012 establishing technical and business requirements for credit transfers and direct debits in euro and amending Regulation (EC) No 924/2009' (see below) (the SEPA Regulation). It defines 1 February 2014 as the deadline in the euro area for compliance with the core provisions of this Regulation. In non-euro countries, the deadline is 31 October 2016. For more information on the SEPA Regulation, refer to this dedicated page on the EPC Website: SEPA Legal and Regulatory Framework

The SEPA Regulation details, among other things, the use of IBAN and BIC by payers and payees. A payee accepting credit transfers must communicate the IBAN of the account to which the payment should be credited and the BIC of its payment service provider (PSP) "but only where necessary", to its business partners (see Article 5 (4) and point (1) (a) of the Annex to the Regulation). A payer wishing to make a payment by direct debit must communicate the IBAN of the account which should be debited and the BIC of its PSP "but only where necessary", to the payee (see Article 5 (5) and point (1) (a) of the Annex to the Regulation).

SEPA Regulation: timelines for application of 'IBAN only' rule

The SEPA Regulation stipulates the timelines for application of the so-called 'IBAN only' rule. This provision is relevant for both PSPs and payment service users (PSUs). Article 5 (7) of the SEPA Regulation states: "After 1 February 2014 for national payment transactions and after 1 February 2016 for cross-border payment transactions, PSPs shall not require PSUs to indicate the BIC of the PSP of a payer or of the PSP of a payee." Article 16 (6) however provides EU Member States with the option to defer application of the 'IBAN only' rule for national transactions to 1 February 2016. Information on transitional arrangements in EU Member States permissible under the SEPA Regulation is published by the European Commission (see link below).

For additional comment on the provisions regarding IBAN and BIC introduced with the SEPA Regulation, refer to the EPC Blog 'Part II - Get Ready for SEPA by February 2014. Early Movers on the Customer Side Share Lessons Learnt. Why IBAN and BIC Remain Important for Bank Customers' (see links below).

IBAN and BIC for consumers

PSPs, businesses and public administrations provide the tools to ensure a smooth transition to IBAN and BIC for consumers.

  • Billers including businesses and public administrations feature related information prominently on websites, invoices and stationary.
  • Consumers find IBAN and BIC pertaining to their own account on their account statements and / or imprinted on their payment card.
  • PSPs provide easy-to-understand instructions on the use of IBAN and BIC on internet home banking channels or on print flyers, for example.
  • In most SEPA countries, a national website dedicated to SEPA is available, which contains a range of IBAN and BIC related items, including educational material facilitating the use of these account identifiers. Links to national SEPA websites can be found on the European Central Bank (ECB) website.

IBAN and BIC for billers

Businesses and public administrations, i.e. billers, should take the following actions:

  • Review invoicing and accounting procedures.
  • Identify and adapt all systems that operate on the basis of account numbers and bank codes.
  • Standardised processes for cross-border payments should be defined to add missing IBAN and BIC codes.
  • For domestic payments: convert existing databases containing customer account information to IBAN and BIC. The EPC recommends that national PSP communities provide centralised conversion services to their business customers. To obtain related information, businesses and public administrations should contact the appropriate bodies at national level. The ECB makes country-specific SEPA information, including SEPA-related contact links, available (see link to 'ECB-SEPA-by-Country Hub' below). 
  • Provide easily accessible information on IBAN and BIC to your business partners and customers; i.e. update your invoices, stationary and other documents used to communicate your own account information to others.

Useful IBAN links for billers:

Disclaimer: External links are provided for information only. The EPC takes no responsibility for their content.

Free EPC newsletter
Blog and Discussion Board
Read more
Follow us

Latest Tweet

Read this interesting itw with @DHUSACorp representative regarding #InstantPayments, #PSD2 and #blockchain