What is a SEPA Direct Debit?

The SEPA direct debit is a practical payment instrument that allows companies to easily collect regular payments from private or business customers from their account while keeping track of regular payments.

In this overview, we answer the most important questions about the SEPA Direct Debit:

  • How does a SEPA direct debit work?
  • How can I pay by SEPA direct debit?
  • What are the advantages and disadvantages of the SEPA Direct Debit?

How does a SEPA direct debit work?

A SEPA direct debit is effected by a written agreement, the SEPA direct debit mandate, between the payee (creditor) and the debtor (customer). Digitally, this is also simply valid without a signature.

A SEPA mandate contains the customer's IBAN and a unique mandate reference defined by the recipient. Direct debits can thus be clearly assigned to a direct debit mandate that has been issued.

Before the direct debit is made, the bank sends an advance notice informing the customer of the amount and due date. On the due date, the amount is simply debited from the debtor's account and transferred to the creditor's bank account.

How can I pay by SEPA direct debit?

To pay by SEPA Direct Debit, payers must give written or electronic consent to the creditor.

The creditor then stores the information from the mandate in its system and collects the agreed amount on the specified date.

To do this, the company needs a unique creditor identification number, which it can apply for from the Bundesbank.

Advantages of the SEPA Direct Debit

  • Convenient and simple payment method for recurring direct debits.
  • Reduced administrative burden for companies and customers when making payments.
  • Payers can request a refund within eight weeks if required.
  • Overview of upcoming payments through advance notice.

Disadvantages of the SEPA Direct Debit

  • Customers must ensure that there are sufficient funds in their account to enable the direct debit.
  • Possible incorrect debits require a reclaim, which is possible up to eight weeks after the debit.
  • Disclosure of bank data entails a low security risk.

Questions and answers about the SEPA direct debit

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