What are SEPA Direct Debit payments?

what are sepa direct debit payments

Wednesday, 22 December 2021, 2 minute read

SEPA Direct Debit is a European standard Direct Debit system which allows sellers to collect Euro denominated payments from accounts located in one of the 34 SEPA countries and associated areas.  

SEPA Direct Debit has become a standardised process in all eurozone countries and non-eurozone SEPA countries. It is now a requirement in these countries that all Euro-denominated payments have to be obtained via this payment scheme.  

SEPA stands for the ‘Single Euro Payments Area’ and it has been put in place in order to create a standard payment system across the eurozone. This, in theory, should make European payments as simple as domestic payments by creating a single market for payments. This has led to three SEPA payment schemes: 

  • SEPA Direct Debit (SDD) 

  • SEPA Credit Transfer (SCT) 

  • SEPA Cards Framework (SCF) 

There are some differences between an SDD and your typical UK based Direct Debit: 


All SEPA Direct Debit transfers are denominated in Euros. This is even the case if the relevant accounts aren’t in Euros, and therefore the payer and merchant’s banks will take on the currency exchange requirement if their base currency isn’t Euro. 

Read more: Currency risk management


Payers are able to obtain a refund from their bank for any unauthorised payments for up to 13 months from the date of transfer. In comparison, the UK Direct Debit Guarantee has an unlimited claim period. 

Read more: How to avoid and stop chargebacks?

Bank Details 

The details needed to initiate a SEPA payment differs to the conventional details needed in the UK. You require a customer’s BIC and IBAN rather than the account number and sort code. 

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Two SEPA Direct Debit Schemes 

There are two different SEPA direct debit schemes: SEPA Core Direct Debit and SEPA B2B Direct Debit. They can both be considered EFT payments. The simple definition of these is that the B2B scheme is only available if you are collecting a direct debit from another business. While the Core scheme is required for any SEPA banks offering Euro denominated Direct Debits. The B2B scheme is optional, while Core is not.

SEPA B2B Direct Debit customers are not entitled to any refunds over authorised transactions, and unauthorised transactions are only possible if the payer can prove that there was no agreement made over the B2B mandate (with a 13 month limit). There is also a shorter period for payment submission for a B2B Direct Debit, where it must be submitted up to one day prior to the collection.

However, with it comes some benefits, where SEPA B2B customers will receive a significantly faster response time from the banks during points of technical failure or non realisation of collection. Overall, the core difference comes down to the fact that a SEPA B2B Direct Debit Scheme is only available for payers/payees who are businesses and not private individuals.

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