The Single Euro Payments Area (SEPA) is set up by the European Commission, and dictates that all electronic payments are considered domestic, regardless of the country/region where the individual, business, or organization, and the bank are located. There is no difference between national/regional and cross-border payments. The SEPA includes the 28 European Union (EU) member states, and Iceland, Liechtenstein, Norway, Switzerland, Monaco and San Marino. The SEPA helps form a single market for payment transactions within the European Economic Area (EEA). Ultimately, the SEPA is expected to reduce the number of payment formats that banks, businesses, and individuals must work with.
A SEPA direct debit allows a creditor to collect funds from a customer’s bank account, provided that a signed mandate has been granted by the customer to the creditor. The customer signs a mandate that authorizes the creditor to collect a payment and instructs the customer’s bank to pay the collection.
SEPA Direct Debits create, for the first time, a payment instrument that can be used for both national/regional and cross-border euro direct debits throughout the 32 SEPA countries/regions.
There are two schemes available: the SEPA Core Direct Debit Scheme and the SEPA Business to Business (B2B) Direct Debit Scheme. Both schemes use the same file format.
The SEPA Core Direct Debit Scheme is the basic scheme. It has the following attributes:
The SEPA B2B Direct Debit Scheme applies to business-to-business transactions and builds on the SEPA Core Direct Debit Scheme. The main differences are:
Yes. You can use the COR1 scheme for SEPA direct debit mandates in Austria, Belgium, Germany, France, Italy, Spain, and the Netherlands. The scheme provides a shorter pre-notification period for the direct debit collection for the creditor.
The International Bank Account Number (IBAN) and Bank Identifier Code (BIC) are used to identify any account in the 32 SEPA countries/regions. Enter the BIC in the SWIFT code field and the IBAN in the IBAN field. Both fields are located on the Additional identification FastTab on the Bank account tab in the Bank accounts page. This is true for both the creditor’s bank account and the customer’s bank account.
In the SEPA, each creditor is identified by a unique creditor identifier. This identifier lets the customer and the customer bank filter each direct debit, and then process or reject the direct debit according to customer instructions. Creditors must request this identifier through their bank. Enter this identifier in the Direct debit ID field for the bank account for the legal entity.
The customer signs a mandate that authorizes the creditor to collect a payment and instructs the customer’s bank to pay the collection. The customer can issue the mandate in paper form or electronically. By default, the mandate expires 36 months after the direct debit is last initiated.
The SEPA data formats are based on the ISO 20022 message standards. You will select the Generic electronic reporting checkbox and select the SEPA Direct debit format as an export format configuration when you configure accounts receivable methods of payment. You use that method of payment when you generate a payment file in a customer payment journal.
You can generate electronic payment files for SEPA direct debits in the following formats:
Under both SEPA Direct Debit schemes, customers have certain rights to refunds. The customer is allowed to recall any authorized transactions during an eight-week period after the due date, without having to give a reason. In the case of unauthorized transactions, the period is extended to 13 months after the due date. Reversals of any payments that have been made are accomplished manually by using the Cancel payment button in the Customer transactions page.