According to data from the European Central Bank, direct debits in the Euro zone totaled 23.2 billion euros in the year 2021, an increase of 5.8% on 2000. This makes direct debits the second most widely used cashless payment method, behind credit transfers and ahead of cards and checks.
When a company wants to take the initiative and automate the collection of its receivables, it opts for direct debit. This payment method is suitable for both one-off and recurring transactions. It helps to improve cash management and build customer loyalty.
With SEPA (Single Euro Payments Area) direct debits online, your customers have an effective solution for simplifying their collections. Treezor provides a comprehensive overview of the features and operation of SEPA Direct Debit Core and B2B, as well as a detailed explanation of the SEPA mandate.
1. SEPA direct debit types: SDD Core or SDD B2B
There are two types of SEPA Direct Debit (SDD):
- SDD Core, available to all payers;
- SDD B2B, for inter-company relations.
Both share a common set of features.
Features of SEPA Direct Debit or SDD
In concrete terms, SEPA Direct Debit enables a creditor to debit an amount in euros from a debtor’s account located in the SEPA zone. This zone comprises 36 countries:
- the 27 members of the European Union (Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden);
- the 4 EFTA (European Free Trade Association) states: Iceland, Liechtenstein, Norway and Switzerland;
- Monaco, San Marino, Andorra, Vatican City;
- the United Kingdom.
Particularly suited to recurring bill payments or subscriptions, there is no limit to the amount you can pay. Nevertheless, direct debits are subject to certain formalities and precise execution rules.
For SDD Core and SDD B2B SEPA direct debits
- Reason for payment: the transaction wording may not exceed 140 characters.
- Presentation deadline: A SEPA direct debit must be presented to the creditor’s bank between 1 and 5 bank business days before the collection date, depending on the type of direct debit.
- SEPA mandate: each direct debit contract requires a different mandate with the RUM/UMR (Unique Mandate Reference) and the debtor’s signature.
- Creditor’s responsibility: the creditor is required to have a SEPA creditor ID, and is responsible for managing and storing the original mandate.
Specific features of SDD B2B direct debits
The SEPA B2B Direct Debit Scheme has been designed for business-to-business payments, with the aim of speeding up the exchange of financial flows and improving commercial relations.
SDD B2Bs can be presented up to one business day before maturity.
The B2B direct debit is an “authorized” payment, so it is impossible to request a refund, except in the case of a fraudulent or erroneous direct debit.