Since 2014, the SEPA Direct Debit has been the only automatic payment system in the European Union countries. The SEPA direct debit, or “Single Euro Payments Area”, allows you to automatically pay your next instalments on a recurring or one-off basis. Let’s take a look at the advantages of this payment method for your company!
How does SEPA Direct Debit work?
This payment system is in general use throughout the SEPA zone, i.e. the 28 countries of the European Union, Switzerland, Norway, Iceland, Liechtenstein, Monaco, San Marino, Andorra and the Vatican.
If you want to set up a SEPA payment, you will first need to give your service provider (the creditor) an authorization. This authorization, called the SEPA Direct Debit Mandate, is essential for the creditor to be able to take the money from your bank account!
What information should be included in your mandate?
Your creditor will give you a document to complete and sign with the following information:
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- the Unique Mandate Reference (UMR): this series of numbers and/or letters is unique for each mandate and is determined by your creditor. It acts as your reference.
- the SEPA Creditor Identifier (SCI): a unique reference that identifies the creditor.
- Bank details for the account to be debited: IBAN, BIC, name and address of your bank.
- Type of payment: one-off or recurring.
- Location, date and signature
The creditor will keep this document and must notify you of the amount of your direct debits 14 calendar days before taking the payment.
What are the benefits of SEPA payments?
With SEPA direct debits, there are no more forgotten payments! You will be automatically debited for the amount agreed with your creditor, and so avoid going into arrears. By choosing this method of payment, you won’t have to send payment by wire transfer or check at each due date. For example, for your health insurance plans, you won’t take the risk of entering the litigation chain and having your plan terminated.
How to dispute a SEPA direct debit?
If, however, you notice a non-compliant direct debit, you’ll be able to dispute it provided you have the SEPA Creditor Identifier (SCO), the date and amount of the direct debit and the Unique Mandate Reference (UMR).
To get a refund, your request must be made to your bank within 8 weeks of the debit. Your bank will then have 10 days to let you know if you will be refunded.