SEPA Direct Debit (SDD)

SEPA Direct Debit Core Scheme (SDD Core)

On this page, you will find the SDD Core Rulebook and associated documentation which are in effect as of 1 February 2014.

To view the SDD Business to Business (B2B) Rulebook and associated documentation which are currently in effect, refer to the following dedicated page on the EPC Website: SEPA Direct Debit Business to Business Scheme (SDD B2B).

The European Payments Council (EPC) launched the SDD Schemes in November 2009. For a definitive source of information regarding the rules and obligations of the schemes, refer to the SDD Rulebooks and the accompanying implementation guidelines approved by the EPC. The EPC publication 'Shortcut to SEPA Direct Debit' (see below) summarises the main features of the SDD Schemes, including their key benefits in non-technical language. To learn more about the term 'Single Euro Payments Area (SEPA) payment scheme', refer to the following dedicated page on the EPC Website: What is a Payment Scheme?

EU Regulation defines mandatory deadlines for migration to SEPA

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' (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 will be 31 October 2016. Effectively, this means that as of these dates, existing national euro credit transfer and direct debit schemes will be replaced by SEPA Credit Transfer (SCT) and SDD. For more information on the SEPA Regulation, refer to these dedicated pages on the EPC Website: SEPA Legal and Regulatory Framework and The EPC Migration Tool Kit: Get Ready for SEPA.

The SDD Core Scheme in a nutshell

The SDD Core, like any other direct debit scheme, is based on the following concept: "I request money from someone else, with their prior approval, and credit it to myself". The payer and the biller must each hold an account with a payment service provider (PSP) located within SEPA. The accounts may be held in euro or in any other SEPA currency, however the transfer of funds (money) between the payer's bank and the biller's bank always takes place in the euro currency. The SDD Core allows a biller to collect funds from a payer's account, provided that a signed mandate has been granted by the payer to the biller. A mandate is signed by the payer to authorise the biller to collect a payment and to instruct the payer's bank to pay the agreed collections. Payers are entitled to instruct their banks not to accept any SEPA direct debit collections on their accounts. The mandate expires 36 months after the last initiated collection. The signed mandate must be stored by the biller as long as the mandate is valid and for a minimum of 14 months after the last collection. The mandate can be issued in paper or electronic formats.

The PSPs executing the direct debit transaction must formally participate in the SDD Scheme. All branches of banks in the euro area must be reachable for cross-border direct debits; e.g. the SDD Core Scheme, since 1 November 2010 as mandated by Article 8 of Regulation (EC) No 924/2009 on cross-border payments in the Community. It is optional for banks to offer services based on the SDD B2B Scheme.

The SDD Scheme may be used for single (one-off) or reoccurring direct debit collections. Even exceeding the requirements of the Payment Services Directive (PSD), the SDD Core Scheme grants payers a 'no-questions-asked' refund right during the eight weeks following the debiting of a payer's account. During this time therefore, any funds collected by SDD Core will be credited back to the payer's account upon request. In the event of any unauthorised direct debit collections, the payer's right to a refund extends to 13 months, as stipulated in the PSD.

Use of scheme options

The SDD Core Rulebook provides PSPs participating in the scheme with the opportunity to offer optional scheme features. The list of individual SDD Core scheme participants, groups of individual SDD Core scheme participants and communities using the option(s) as well as information about how these participants apply the option(s) can be found on this dedicated EPC Website: SDD Core Options.

Use of SDD R-transaction reason codes 

One of the main benefits of the SDD Schemes is that the scheme rules streamline exception handling, both at the process level and the dataset level. This allows straight-through-processing and automated exception handling end-to-end. Possible exceptions to the normal execution of a direct debit collection include refunds, returns, rejects, refusals and reversals (commonly referenced as R-transactions). The SDD Rulebooks specify reasons which trigger an R-transaction, i.e. data elements required to convey information to the payee (biller) with regard to the R-transaction. The correct application of these reason codes by a debtor bank, (the bank of the payer), informing a creditor bank, (the bank of the biller), about a failed SDD collection is crucial to allow the biller to determine its reaction. Scheme participants, i.e. PSPs that have formally adhered to the schemes, are therefore reminded to apply the specific SDD R-transaction reason codes described in the rulebooks when reporting a failed collection. In July 2014, the EPC published the document ‘Guidance on reason codes for SDD R-transactions’ (see links included with the ‘EPC technical documents’ below).

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