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SEPA Direct Debit

The two EPC SEPA Direct Debit schemes offer consumers and businesses a convenient and secure means of paying bills. They are used to facilitate over 20 billion transactions every year in SEPA.

SEPA Direct Debit 1

Direct Debits () have many advantages for consumers: by automating the transaction, consumers avoid the risk of missing a payment deadline and of being charged additional fees for late payments, or suffering from an interruption of service.

They are especially useful for recurring payments, as they provide peace of mind for consumers. In addition, security is key: consumers enjoy a fast and simple refund procedure after a was made on their account. SDDs also offer many benefits for businesses, such as efficiency gains – thanks to the automation of payment processing – and the optimisation of cash flow, as invoices are paid when they are due and can be directed to a single account. Lastly, by introducing a standardised payment instrument, the schemes truly facilitate trade across Europe and contribute to the goals of the single market.

SDD step 1

1

To pay his monthly electricity bill, Simon completes the direct debit mandate provided by his power company.

A different scheme for consumers and businesses
The EPC has created two SDD schemes: one designed primarily for consumers (SDD Core), one exclusively for businesses (SDD B2B).

In both schemes, the biller requests money from the payer with their prior approval and the sum is credited to the biller’s account. To consent to the debit from their account, the payer has to sign a mandate prepared by the biller and issued in either paper or electronic format. 

A direct debit can only be made in euros, but the accounts – which have to be located in – may be held in any other currency.

Read More about the SDD mandate

In both schemes, it is the biller who is responsible for storing the original mandate (and any information regarding changes in the mandate or its cancellation). This situation, where the biller is responsible for the mandate, is called the ‘creditor-driven mandate flow’.

SDDs can be used for a one-off transaction and for recurring payments (for example, monthly electricity bills). 

Read more about the SDD Core scheme

Read more about the SDD B2B scheme

SDD step 2

2

The power company asks its bank to send the collection to Simon's bank.

Main differences between the Core and B2B versions of the SDD Scheme
  • The Core scheme is mandatory for offering euro direct debit for consumers, whereas it is optional for  to offer services based on the B2B scheme.
  • Under the B2B scheme, the payer cannot be a private individual and must be a business customer. A private individual can, however, be a biller under the B2B scheme.
  • In the B2B scheme, the payer is not entitled to obtain a refund for an authorised transaction. The payment is deemed final three business days after the debit date; within these three days, the payer’s can still return the transaction for specific reasons.
  • The refund rules are different in the Core scheme.
    • During the eight weeks following the direct debit date, the payer has the possibility of requesting a refund without having to provide any justifications. This is the right to a ‘no-questions-asked’ refund.
    • If the transaction was unauthorised (i.e. the collection does not relate to the signed mandate), the payer can ask for a refund up to 13 months after the direct debit.
  • To ensure that a transaction is authorised in the B2B scheme, the payer’s must check whether there is a valid mandate in place prior to executing the collection. The of the payer must have obtained confirmation of the mandate data from the payer before debiting the account, and has to store this data for future verification purposes. The of the payer then checks the first and subsequent collections against the stored mandate data and the related verification instructions received from the payer. Further information about the confirmation requirements and operational implementation is available in the EPC Clarification paper on SDD Core and SDD B2B rulebooks
  • In the Core scheme, the of the payer does not perform these mandate control and storage activities. It receives the mandate-related information with the first collection.
SDD step 3

3

On the date agreed with Simon, his account is debited of the agreed amount.
He doesn't have any further action to take to pay his bill!

The SDD schemes offer complete protection to the payer
Thanks to a number of rules, the SDD schemes put security to the fore.
  1. must ensure that only trustworthy billers are allowed to use . This is in the interest of the billers’ , as they would have to cover any losses resulting from fraudulent and / or erroneous direct debits. The risk of any fraudulent or erroneous payment is borne by the biller's – never by the payer.
  2. As each mandate is uniquely identifiable (based on the combination of the 'Unique Mandate Reference' and the 'Creditor Identifier'), each collection can be traced back – immediately and unmistakably – to the biller. As a result, any biller collecting SDDs can be rapidly and unequivocally identified.
  1. Payers can get their money back: in the Core scheme, a refund is possible up to eight weeks after the transaction without supplying any justification; in the case of an unauthorised direct debit, a refund request can be made up to 13 months after the transaction.
  2. And finally, in the Core scheme, any individual has the right to ask their to add an extra layer of control. The payer can ask their to block collections on their accounts through the use of whitelists or blacklists of billers, to set a maximum number of collections allowed within a certain period or a specific maximum amount per collection. These rights and others are listed in the Regulation.
The SDD schemes support automated exception handling for the biller

In certain situations, the collection is not processed in the normal way. To handle these exceptions, send messages called ‘R-transactions’, as their names all start with an R: refusals, rejects, returns, refunds, reversals. The R-transactions contain reason codes – defined in the rulebooks – which help the biller and its to treat a failed collection and to determine automatically their reaction. It is therefore important that all correctly apply the reason codes. More information is available in the document Guidance on reason codes for SDD R-transactions