Glossary
What is SEPA direct debit?
SEPA direct debit lets a business pull euro payments from a customer's bank account after a signed mandate. Learn the steps, refund rules and an example.
Updated · By PayToMe Editorial
SEPA direct debit is a payment method in which a business collects euros directly from a customer’s bank account, after the customer signs a mandate that authorizes it. It works across the countries in the Single Euro Payments Area and is widely used for subscriptions and repeat invoices.
How it works
The key idea is that the payee starts the payment, not the payer. That is the opposite of a bank transfer, where the customer pushes money. Because the payee pulls, a mandate is required first.
- Get a mandate. The customer gives written or electronic permission and shares their IBAN. The mandate has a unique reference.
- Pre-notify. You tell the customer the amount and date before collecting. The standard notice period is 14 days unless you agree a shorter one.
- Submit the collection. Your bank or provider sends the request to the customer’s bank.
- Funds settle. The money arrives in your account. A customer may still dispute it afterward under the scheme rules.
There are two schemes. SEPA Core suits both consumers and businesses and gives the payer a refund right for eight weeks after the debit, no questions asked. SEPA B2B is for business payers only and does not offer that refund right, so it carries less risk for the creditor. Rules are published by the European Payments Council, so confirm current details there or with your provider.
Direct debit can reduce late payment, because the customer does not need to remember to pay each invoice. It works best for predictable, recurring payments such as monthly retainers.
Example
A design studio in Lyon invoices a client EUR 1,200 per month for a retainer. The client signs a Core mandate on January 2.
Use the invoice generator to produce a euro invoice with your payment details today. PayToMe’s built-in payment collection is in development, and we have not announced SEPA support, so check the pricing page for current status.
Related terms
- IBAN: the account number format SEPA uses.
- ACH: the US counterpart for bank-to-bank pulls.
- Recurring payment: repeat charges on a schedule.
- SWIFT code: used for non-SEPA international transfers.