SEPA Direct Debit: Key Features and Core vs. B2B Comparison

The Single Euro Payments Area (SEPA) unites 36 European countries under a common framework, allowing euro-denominated cashless payments to be processed seamlessly and uniformly across borders. One of the most convenient tools for businesses is SEPA Direct Debit — a method of automatically debiting funds based on a client’s mandate. In addition, SEPA Instant enables real-time euro transfers across participating countries, with funds delivered in seconds — 24/7/365. However, there are two types of SEPA Direct Debit: Core and Business. Let’s break down the key differences and help you determine which option suits your business best.

How SEPA Direct Debit Works

SEPA Direct Debit allows businesses to collect payments automatically based on pre-signed mandates. This is convenient for both recurring payments and one-time transactions. Clients only need to give consent once, and the process continues without their further involvement.

Interesting fact: Over 20 billion transactions are processed annually through this system across EU countries, making it one of the most popular payment methods in Europe.

Core Direct Debit: A Universal Solution

Core is suitable for both businesses and individuals. It provides protection for clients: in case of an error or disagreement, they can request a refund within 8 weeks. This makes it a reliable and flexible tool.

Key features:

• Suitable for all types of clients (B2B and B2C).
• Refunds can be requested within 8 weeks without explanation.
• Standard processing times — 2 to 5 business days.

Business Direct Debit: For Corporate Clients

The Business version is designed exclusively for B2B transactions and offers stricter refund conditions. Unlike Core, it does not allow clients to request refunds without a valid reason, which significantly reduces risks for businesses.

Advantages:

• Only for corporate clients (B2B).
• No right to a refund after payment confirmation.
• Faster processing times (1–2 business days).

Table: Main Differences Between Core and Business

Parameter	Core	Business
Target Audience	Individuals and corporate clients	Corporate clients only
Refund Rights	Up to 8 weeks without explanation	No refund rights after confirmation
Processing Times	2–5 business days	1–2 business days
Mandate Requirements	Simple format, suitable for mass usage	Strict format, requires client confirmation
Data Protection (GDPR)	Mandatory, including the right to revoke	Mandatory but more flexible for businesses
Popularity in Europe	Widely used, especially for B2C payments	Popular in the B2B segment

Common Mistakes and How to Avoid Them

Mistakes in Mandate Completion:

Incorrect or incomplete mandates can cause payment rejections. Make sure all required fields are filled, including signature and date, and that the mandate complies with SEPA standards.

Issues with Refunds:

Frequent refund requests can harm your reputation and increase costs. To prevent this, clearly explain the terms of payments and notify clients in advance.

Practical Tips for Businesses:

Efficient use of SEPA Direct Debit requires not only correct mandate completion but also effective payment management. One key aspect is to inform clients about upcoming payments in advance. This helps reduce unexpected refund requests and builds trust. Automating notifications through CRM systems or email marketing is also recommended. Additionally, having clear refund policies and informing clients about them helps avoid disputes. Regularly analyzing transaction data can help identify and fix issues early, reducing costs and improving customer satisfaction.

Comparison of Fees and Costs

Example calculations:

• The average fee is 0.1–0.3% of the transaction amount, while for credit cards it ranges from 1–3%.
• For payments totaling 10,000 euros, the fee would be about 10–30 euros compared to 100–300 euros for credit cards.

Typical fees by region:

Country	Core (%)	Business (%)
Germany	0.15–0.25	0.10–0.20
France	0.10–0.20	0.08–0.15
Spain	0.20–0.30	0.15–0.25

Step-by-Step Guide to Setting Up SEPA Direct Debit

• Step 1: Prepare Documents and Mandates

Gather client information and prepare mandate forms according to SEPA standards. Ensure forms include all mandatory fields: client name, IBAN, BIC, date, and signature. For electronic mandates, use two-factor authentication to verify consent.

• Step 2: Sign an Agreement with a Bank or Payment Provider

Choose a provider that supports SEPA payments and clarify the terms: fees, processing times, and data security requirements.

• Step 3: Integration with Payment Systems and ERP

Integrate SEPA payments with internal systems via API. Set up automatic debits and client notifications.

• Step 4: Testing and Trial Transactions

Conduct trial payments with small amounts to verify the accuracy of mandates and integration settings.

• Step 5: Launch and Monitor Transactions

Go live and monitor payment statuses in real-time. Regularly update client data and mandates to minimize risks.

Frequently Asked Questions (FAQ)

1. What should I do if a payment fails?

— Check for an active mandate and sufficient funds in the client’s account.

2. Can I cancel a mandate?

— Yes, the client can revoke a mandate at any time.

3. Why choose SEPA Direct Debit over credit cards?

— Lower fees and no risk of chargebacks with Business Direct Debit.

4. Do I need to renew mandates regularly?

— Yes, it is recommended to renew mandates every 36 months for Core and every 12 months for Business.

5. How much does it cost to connect SEPA payments?

— Fees vary by bank but typically range from 0.1–0.3% of the transaction amount.

6. Can I use both types for my business?

— Yes, if your business works with both individual and corporate clients, using both types may be an optimal solution.

How to Choose the Right Type of SEPA Direct Debit?

If your business is oriented towards individual clients, Core is the optimal solution due to its flexibility and client protection. For companies dealing with corporate clients, Business helps minimize risks and speed up payment processing. That will allow you to improve financial management, reduce costs, and provide greater convenience for your clients.