Frequently asked questions

SEPA Direct Debit

What is a SEPA Direct Debit?

SEPA Direct Debit (SDD) is a payment method allowing a creditor (biller) to collect funds from a debtor's (payer's) account, provided that a signed mandate has been granted by the payer to the biller.

This payment method is based on a universal standard: SEPA (Single Euro Payments Area).

SEPA is a European Union (EU) initiative to harmonise payments across the Eurozone. Its goal is to make European payments as easy and cheap as domestic ones by creating a single market for euro-denominated payments.

SEPA Direct Debit has two key features:

  • SDD is pull based. Once given a mandate by their customer it is the merchant who initiates payments
  • SDD payments are bank-to-bank. There are no card networks involved in the SEPA Direct Debit scheme. All communications happen directly between the banks
Which countries are part of SEPA?

The SEPA zone is the biggest unified market in the world: 34 countries in Europe, 500 Million citizens.

It consists of the 28 EU member states:

Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, United Kingdom.

The four members of the European Free Trade Association (Iceland, Liechtenstein, Norway and Switzerland), Monaco and San Marino are also part of SEPA.

Which currencies are used for SEPA transactions?

SEPA is only used for euro-denominated payments.

In non-eurozone countries, the SEPA schemes are only used for euro-denominated payments. Reachability is only required for euro-denominated bank accounts. For payments made in the local currency, national schemes should continue to be used.

For whom is SEPA Direct Debit?

SEPA Direct Debit is an excellent payment method for all businesses selling their products and services in euro all over Europe.

They are particularly good for:

  • Regular payments (e.g., subscriptions or regular donations)
  • Customers with an ongoing relationship (e.g., account customers)
  • Invoicing for services (e.g., accountancy, tax advice, etc.)

That includes companies providing both online and offline content and services.

Can all European customers pay via SEPA Direct Debit?

SEPA direct debit is dedicated to euro payments, therefore any client with a euro bank account in one of the banks within the SEPA area is able to pay via this payment method.

As of today, Finstack is only operational within the euro zone countries.

What are the payment timings for Direct Debit?

SEPA Direct Debit refers to two schemes:

  • SEPA Direct Debit Core 
  • SEPA Direct Debit B2B (only available for payments between businesses)

Under the Core scheme, it takes 5 interbank days to set up each new payer, and 2 interbank days to collect from payers who you currently have a Direct Debit relationship with.

Under the B2B scheme, it takes 1 interbank day before a payment is executed. 

Once Finstack has collected payments from your customers we hold the money until the Wednesday after, which is the day when we send the money directly to your bank account (there is an existing option if your business has specific needs implying to collect the money right after each SDD, or on a more frequent basis).

Can I collect one-off payments using Direct Debit?

Yes. Finstack dashboard lets you manually create one-off transactions, and send emails or create payment buttons to collect the money from your customer(s).

Although Direct Debit is most well-known for recurring payments, this feature can also be used to:

  • collect high amount payments
  • being sure to get paid on a sepcific date
Do I need a SEPA Creditor Identifier (SCI)?

SCI is a way of identifying the creditor (i.e. the party initiating the direct debit). Both the Creditor Identifier and the Mandate Id gives the debtor bank (bank from whom you are collecting funds) the ability to check if a valid SEPA Direct Debit mandate is in place.

Having your own SCI enables you to directly take payments from your customers, and your name will appear as "Creditor" on the mandates.

If you do not already have a SCI, you can:

  • ask your bank to provide you with your SCI,
  • use Finstack banking partner's SCI to collect money from your customers on your behalf. In this case, your name will be mentioned as "Ultimate Creditor" on the mandates.

If you chose the latter, we provide you with everything you need to sign up online and start taking payments, without the need to talk to your bank.

Where to look for more information?

Feel free to contact us. Our experts will be happy to provide you with further information.

All the legislation and reference materials on SEPA Direct Debits are available on the European Payments Council website.