SEPA direct debit

What is SEPA direct debit and who uses it?

SEPA direct debit lets your business collect payments in euros from customers' bank accounts in any SEPA country. It’s widely used for anything recurring, say, a support subscription, regular retainers, or membership dues, where you want the payment to arrive on time every period. Before you can collect, the customer signs what’s called a mandate, which they can do in writing or electronically; this act gives formal permission for you to initiate pulls on their account. Your business (known in this setting as the creditor) then sends collection requests, usually through your bank or a payments provider that has access. Both sides, the payer and the collector, need accounts in SEPA countries, and both accounts have to be denominated in euros.

Core and B2B schemes, mandates and creditor IDs

SEPA direct debit comes in two types. Core is available for payments from both individuals and businesses, while B2B (business to business) is just for customers acting in a business capacity. Here’s a significant distinction: Core allows your customer (even a company) to claim an unconditional refund within eight weeks simply by asking, with no explanation required. There’s no equivalent for B2B, so if you collect payments from another business using B2B, that right does not apply.

You’ll also need a valid mandate from each payer before any collection, keep the mandate on file, as your bank is within its rights to ask for documentation. And there’s the creditor identifier, or CID, a reference used to tag you as the collector for every debit; this comes from your bank or your country's designated authority. The process for getting a CID is not the same everywhere, so your bank can clarify the steps. Remember to cancel mandates when a customer formally ends your arrangement, so you’re not at risk of pulling from the wrong account.

Practical points for collecting from customers

Notify your customer ahead of every scheduled collection, this covers both legal requirements and the practical side of keeping payment disputes low. The advance notice should state when the money is coming out and show the collection reference your customer will find on their bank statement. It’s worth double-checking, before each collection run, that every mandate is still current and that the customer hasn’t moved banks or revoked their agreement.

Collections can fail: maybe the account balance is too low, or the account details were changed. So, plan ahead for following up on failed payments with a reminder or a new payment attempt, depending on your contract terms. If you’re dealing with a late-paying overseas client, review our guide on late payment from foreign clients for detailed handling steps.

Frequently asked questions