SEPA direct debit scheme
What is SEPA direct debit scheme?
The SEPA payment procedures at a glance:
- SEPA-transfer procedure
- SEPA basic direct debit
- SEPA corporate direct debit
As part of the so-called SEPA migration, nationally valid direct debit procedures were replaced by an internationally valid SEPA format. This made cross-border direct debits in the euro payments area possible for the first time. In the meantime, many other non-euro countries have also joined the SEPA direct debit scheme – including Switzerland, Norway and Iceland. A basic distinction is made between the SEPA Core Direct Debit and the SEPA B2B Direct Debit. The biggest operational change for customers and companies is the use of an IBAN number (International Bank Account Number) and the BIC number (Bank Identification Code). The SEPA Direct Debit Scheme and the associated SEPA Direct Debit Mandate primarily improve consumer protection. Conversely, this means the following requirements to be met by companies:
- Individual identifier for identification: Each payee must have a so-called Creditor Identifier.
- Mandate: The legal legitimization for the collection of direct debits is the SEPA mandate, which contains the payer’s consent to the payee to collect due receivables by direct debit.
- Preset mandate text: Each SEPA direct debit mandate must contain certain information for the so-called mandate text. In addition to the authorization and the names of the recipient and the debtor, this also includes the creditor identification number, as well as the name of the bank and the IBAN and BIC number.
- Mandate reference: Each mandate must contain a number that can be assigned by the payee. As a rule, this is the invoice number.
- Duty of the payee to provide information: The company may not arbitrarily collect amounts or partial amounts, even in a subscription. Instead, it must inform the payer of the amount of the direct debit and the collection date.
What are the advantages of the SEPA direct debit scheme for customers and companies?
In addition to the obligations for the payee, there are also a number of benefits – both for the company and for the consumer:
- Cross-border payment transactions are generally facilitated
- There are no more payment delays for direct debits, the company or the payee receives the outstanding amount within one day
- The uniform file format XML is mandatory. This simplifies the handling of payment transaction systems
- In addition, the use of XML reduces the data loss that can result from conversions
- SEPA Direct Debit scheme provides a uniform legal framework for cashless payments in Europe
- SEPA Direct Debit scheme is a sustainable system that is being promoted across Europe, while national payment systems are increasingly being replaced
- As a rule, SEPA payments are executed at advantageous conditions for the consumer
What does this mean for the subscription economy?
The duty of the payee to inform the customer naturally also applies to subscriptions. However, a special SEPA direct debit form, for example, simplifies and reduces the effort for recurring payments. In this case, the customer must explicitly agree to the wish to subscribe as part of the SEPA direct debit mandate. The direct debit mandate regulates the authorization to collect the agreed amounts from the payer’s account. In addition, the customer has the right to revoke the payment within an agreed period of time or to demand a refund of the debited amount.
SEPA direct debit scheme as a win-win for companies and customers
The topic of SEPA is very extensive and naturally includes more factors than just direct debits. It is a package of measures by the EU to enable uniform payment transactions across the EU and beyond. Through the SEPA scheme, international euro payments have become easier and cheaper, which is an important aspect especially in the case of frequently recurring payments, such as in the case of subscriptions.