While SEPA direct debit is likely familiar to you, you may not be aware of SEPA direct debit for businesses. SEPA, which stands for “Single Euro Payments Area,” is used by practically all of the member states of the European Union to conduct cashless transactions within the EU. This article will guide you through what SEPA B2B and SEPA direct debit core are and the critical differences between them. Scroll down to continue!
What is SEPA Direct Debit System?
Before we begin, it’s essential to get all our facts straight. Below, we’ll be explaining what the SEPA direct debit system is. Since its introduction in 2014, the SEPA direct debit system has been used for all electronic transactions within the EU. The 28 EU member states and Norway, Switzerland, Iceland, Liechtenstein, Monaco, and San Marino all use the SEPA Direct Debit System.
Before SEPA, each EU country had its own way to send and receive money. Anyone who wanted to make a payment across borders could not do so as easily as they can now.
The IBAN is the most important part of SEPA direct debit. This is the account number that account holders in almost all SEPA member states use. It is also called your international bank account number. You also have a BIC, which helps you identify your bank (Bank Identifier Code). When getting a SEPA payment, you also need a direct debit mandate or a firm direct debit mandate.
Both SEPA Direct Debit Core (SDD Core) and SEPA Direct Debit B2B (SDD B2B) let you pay bills, rent, and subscriptions on a regular basis.
SDD Core is for all direct debit transactions, while SDD B2B is only for recurring transactions between businesses or organisations. Both ways of paying are similar in how they work, but how the direct debit mandate is handled and how long it takes to get a refund are very different.
In this article, we’ll talk about how SEPA direct debit payment schemes work and how SDD B2B gives businesses extra protections.
What is Direct Debit Core SEPA?
A SEPA direct debit core, or SDD core, is a payment that goes from the debtor’s account to the creditor’s account. People often use SEPA direct debits to make regular payments for things like rent, utilities, software subscriptions, loan repayments, etc. For a SEPA direct debit core payment, the debtor must give the creditor a mandate that lets the creditor take money out of the debtor’s account under certain agreed-upon conditions.
A unique mandate reference is used to find the mandate (or UMR). A creditor identifier is used to find out who the creditor is. This is usually done by the national bank of the creditor’s country. The payment must be made between two weeks and two business days before it is due. It can be turned down by the debtor’s bank until five days after the due date, for example if the account has been closed. The debtor needs to be told about the settlement date two weeks before it happens, unless the debtor says he or she doesn’t want to be told.
You can get your money back from a SEPA direct debit up to eight weeks after it was made. During that time, you can ask for a refund even if there was a valid mandate and the payment was approved.
Then, up to 13 months after the payment was made, a refund can be asked for if there was no valid mandate or if the payment was not authorised.
What is SEPA Direct Debit B2B?
Companies and tax authorities both use SEPA direct debit B2B payments. Most people use it to pay back loans, pay taxes, or pay for big purchases.
A SEPA direct debit business-to-business payment (SEPA Direct Debit B2B, or SDD B2B for short) is similar to a SEPA direct debit core (SDD), but there are two major differences that matter to businesses: verifying the mandate and the length of time it takes to get a refund.
Before an SDD B2B payment can be made, the mandate that both parties agreed on must be sent to and registered by the PSP of the debtor. SDD Core payments don’t have to register a mandate with the PSP, which makes them different from SDD B2B payments in this way. Also, it is the responsibility of the debtor’s PSP to make sure that a SEPA direct debit B2B matches a valid mandate before executing the payment and taking money out of the debtor’s account.
Because of this extra step and the security it gives the debtor, a SEPA direct debit B2B payment cannot be refunded by the payer if there was a valid mandate and the mandate had been approved. This is not the case with a SEPA direct debit core payment.
If there was no valid mandate or the payment was not authorised, an SDD B2B payment can still be refunded up to 13 months after it was made. Up to three days after the execution, the debtor’s PSP can still send the payment back for technical reasons or because the debtor’s PSP can’t accept the collection for other reasons, like the account being closed, the customer being dead, the account not being able to accept direct debit, or the debtor refusing the debit.
A SEPA direct debit B2B payment must also be started between two weeks and one business day before it is due. But unlike a SEPA direct debit core payment, the debtor does not need to be told ahead of time.