SEPA Direct Debit

SEPA Direct Debit is a Europe-wide direct debit system that allows merchants to collect euro-denominated payments from accounts in 36 SEPA countries and associated territories.

SEPA Direct Debit is now available in all Eurozone countries and non-Eurozone SEPA countries. In these countries, all euro-denominated payments must be collected via the SEPA payment scheme.

This guide explains what SEPA is and summarizes the key features of the SEPA Direct Debit scheme from a merchant's perspective to help you understand what it means for your business.

What is SEPA?

SEPA (Single Euro Payments Area) is an initiative launched by the European Union (EU) to coordinate payments in the Eurozone. The initiative aims to make European payments as simple and cheap as domestic payments by creating a single payment market denominated in euros.

To achieve this goal, the European Payments Council (EPC) has developed three SEPA payment schemes. Each scheme is a set of interbank "rules, practices and standards" that define payment instruments:

• SEPA Direct Debit (SDD)
• SEPA Credit Transfer (SCT)
• SEPA Card Framework (SCF)

SEPA Direct Debit is broadly similar to UK Direct Debit

SEPA Direct Debit is pull-based. Once the customer authorises, the merchant initiates the payment.

SEPA Direct Debit payments are bank-to-bank. The SEPA Direct Debit scheme does not involve any card network. All communications are directly between banks.

However, there are five key differences between SEPA Direct Debit and UK Direct Debit:

1. Currency

All SEPA Direct Debit transactions are made in Euros (even if the account in question is not in Euros). Any required currency conversion is determined by the payee's and merchant's banks.

2. Refunds

Payees can obtain a refund for unauthorised SEPA payments from their bank for up to 13 months. Under the UK Direct Debit Guarantee, compensation claims are not limited in time.

3. Bank details

To collect SEPA payments, you need your customer's BIC and IBAN, not their account number and sort code.

4. Customers

Businesses and consumers can be treated differently (see the two schemes referred to for SEPA Direct Debit below).

5. Implementation

Several implementation details of SEPA Direct Debit differ from the UK, including:

• Payment timing
• How authorisations are stored
• Submission process

How to collect SEPA Direct Debit payments with GoCardless

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1. Create your free GoCardless account, access your user-friendly payments dashboard and connect your accounting software (if you use one).
2. Easily set up and schedule SEPA Direct Debit payments through the payment page at your website's checkout or a secure payment link.
3. From now on, you'll get paid on time every time, because GoCardless automatically collects payments on the scheduled date. It's simple.

SEPA Direct Debit refers to two schemes

SEPA Direct Debit refers to two schemes: SEPA Core Direct Debit and SEPA B2B Direct Debit. In short, the B2B scheme is only available if you receive direct debit payments from other businesses.

The Core Scheme is mandatory for all SEPA banks that offer Euro-denominated direct debit services. However, the B2B Scheme is optional, which means that not all banks can offer it.

When deciding which scheme to go for, you should consider the following factors to choose the one that best suits your needs:

1. Customers – The SEPA B2B Direct Debit Scheme is only available to corporate payers - not individuals or micro-businesses. The Core Scheme is available to all payers.
2. Protection against compensation claims - SEPA B2B Direct Debit customers are not entitled to a refund for authorized transactions. A refund is only available if the payer proves that he disagreed with the B2B authorization (within 13 months of the debit date).
3. Time - SEPA B2B Direct Debits offer shorter payment submission times (1 day before collection) and faster bank response times (2 days after collection) in the event of technical glitches or inability to collect payments.

In this guide, references to SEPA Direct Debits refer to the Core and B2B schemes unless explicitly stated.

How will SEPA Direct Debits affect UK merchants?

The SEPA Direct Debit scheme only affects direct debit payments denominated in Euros. Merchants collecting payments in GBP within the UK will continue to collect direct debits through the Bacs system as before. However, UK businesses collecting Euro-denominated payments from European customers will use the Euro Direct Debit scheme, SEPA. [](https://gocardless.com/guides/posts/bacs-payments/)

The SEPA payment scheme makes collecting Euro payments cheaper and easier. If you want to learn more about SEPA payments and how to become compliant, you may find our SEPA Preparation Guide helpful.

GoCardless enables business owners to collect SEPA payments quickly, easily and cost-effectively - Learn more about how merchants can save time, money and stress by collecting SEPA payments with GoCardless.