IBAN & SEPA
SEPA Direct Debit
SEPA Direct Debit (SDD) is a pull-based payment instrument that allows a creditor to collect funds directly from a debtor's bank account across the SEPA zone. Unlike credit transfers, the payment is initiated by the receiver of funds. It comes in two flavours: SDD Core for consumers and SDD B2B for business-to-business collections.
The debtor signs a mandate authorizing the creditor to collect payments from their account. The creditor then submits collection instructions to their bank, referencing the debtor's IBAN and the mandate details. For Core SDD, consumers have an unconditional right to a refund within eight weeks. B2B mandates have no automatic refund right but require the debtor's bank to verify the mandate before execution. Both schemes follow strict timelines — first collections require more lead time than recurring ones.
SDD is the backbone of recurring payments in Europe — subscriptions, utility bills, insurance premiums, and loan repayments all rely on it. It replaced legacy national direct debit schemes with a single cross-border standard, letting businesses collect payments from customers in any SEPA country using a single creditor identifier and one set of rules.
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