Single Euro Payments Area (SEPA) Direct Debit Core was designed to facilitate transactions between European countries. It is one of the most popular ways to pay in France for recurring payments. In this article, we explain the main characteristics of SEPA Direct Debit Core (SDD Core), along with its advantages, uses, and mechanism. We also explain how it differs from SEPA business-to-business (B2B) debits and how to offer customers automatic Direct Debit Core with Stripe.

Key takeaways

• SDD Core is a secure payment method where payees authorize creditors to debit sums from their bank account on a given due date. It supports business-to-consumer (B2C) and B2B use in the SEPA zone.
  
• Payees authorize debits by signing a SEPA Direct Debit mandate. Creditors must retain the mandate.
  
• SDD Core is accessible to both private individuals and businesses, while SEPA B2B Direct Debit is reserved for professional use. Unlike Direct Debit Core, B2B transactions cannot be contested except in cases of fraud or invalid mandates.
  
• There are many advantages to SDD Core. Because creditors initiate payment orders, SDD Core offers peace of mind by helping them manage cash flow and reduce the risk of failed or late payments.
  

What is SDD Core?

SDD Core is an intra-European payment method that lets creditors debit payee accounts using prior authorization.

Account holders sign a direct debit mandate that authorizes the creditor to initiate payment orders on their behalf. This helps ensure collection on the due date, thereby reducing the risk of failed or late settlements.

Who is SDD Core for?

SDD Core is designed for payments between bank accounts in the SEPA zone, which includes the European Union and certain countries associated with the EU, including Albania, Andorra, Iceland, Liechtenstein, Moldova, Monaco, Montenegro, North Macedonia, Norway, San Marino, Serbia, Switzerland, the United Kingdom, and Vatican City.

SDD Core is accessible to both private individuals and businesses. It is used to pay one-time and recurring invoices denominated in euros. It is especially suited to subscription-based services or regularly invoiced services, such as mobile telephone and internet services; insurance; software-as-a-service (SaaS); rent; tuition and cafeteria fees; water, gas, and electricity bills; and gym memberships.

How does SDD Core work?

SDD Core relies on a SEPA Direct Debit mandate, a contract entered into by the creditor and payee. The agreement specifies the authorized terms and conditions of the debit and contains key details, including:

• Payee’s name and address
  
• SEPA creditor identifier
  
• Payee’s International Bank Account Number (IBAN)
  
• Business Identifier Code (BIC) for the payee’s bank
  
• Type of transaction authorized (one-time or recurring)
  
• Authorization signed by the payee
  
• Unique mandate reference (UMR), a number assigned to each authorization
  

To activate an SDD Core, the payee must complete the direct debit mandate sent by the creditor and provide their bank identity statement (RIB). The account holder then signs and returns the mandate, which authorizes the creditor to initiate collections. The business must retain the mandate.

Creditors are required to provide payees with a direct debit notice at least 14 days before the due date. The transaction runs via interbank networks and appears on each parties’ bank statements once approved.

Stripe Payments lets businesses initiate collections from authorized accounts in the SEPA zone safely and securely. It handles SDD Core mandates and assigns a UMR number to each one.

What is the difference between SDD Core and SEPA B2B Direct Debit?

SDD Core differs from SEPA B2B Direct Debit by its accessibility, usage, and contestability. SDD Core is open to everyone and must be offered by all banks in the SEPA zone. B2B Direct Debits are restricted to businesses and nonprofit organizations. It is an optional service available from some financial institutions.

Public institutions typically use SEPA B2B Direct Debit to collect certain business taxes, such as value-added tax (VAT), corporate income tax (IS), and contribution on the added value of companies (CVAE). B2B Direct Debit authorizations have to be registered with the payee’s bank. Businesses and individuals typically use SDD Core to pay for regular invoices and subscriptions.

SDD Core transactions can be contested and refunded up to 8 weeks after the debit, or 13 months in cases of fraud. By contrast, B2B Direct Debits are more restrictive. They cannot be contested unless they were unauthorized (e.g., invalid mandates or fraud). Account holders have 13 months to contest unauthorized transactions with their bank.

Why offer SDD Core?

For businesses, offering SDD Core as part of the checkout process provides several operational benefits. It can help:

• Ensure invoices are paid on time
  
• Reduce failed and late payments and dunning
  
• Automate recurring transactions, saving significant time
  
• Collect payments throughout the SEPA zone, as it is a standardized procedure
  
• Improve cash flow projections and management
  
• Save money, since most banks in France—such as BNP Paribas and Banque Populaire—offer SDD Core for free
  
• Use secure interbank networks
  
• Ensure traceability of transactions
  
• Simplify the checkout process: customers don’t need to intervene once the mandate is signed
  

How Stripe Payments can help

Stripe Payments provides a unified, global payments solution that helps any business—from scaling startups to global enterprises—accept payments online, in person, and around the world.

Stripe Payments can help you:

• Optimize your checkout experience: Create a frictionless customer experience and save engineering time with prebuilt payment UIs, access to 125+ payment methods, and Link, a wallet built by Stripe.
  
• Expand to new markets faster: Reach customers worldwide and reduce the complexity and cost of multicurrency management with cross-border payment options, available in 195 countries across 135+ currencies.
  
• Unify payments in person and online: Build a unified commerce experience across online and in-person channels to personalize interactions, reward loyalty, and grow revenue.
  
• Improve payments performance: Increase revenue with a range of customizable, easy-to-configure payment tools, including no-code fraud protection and advanced capabilities to improve authorization rates.
  
• Move faster with a flexible, reliable platform for growth: Build on a platform designed to scale with you, with 99.999% historical uptime and industry-leading reliability.
  

Learn more about how Stripe Payments can power your online and in-person payments, or get started today.

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