Single Euro Payments Area (SEPA) Direct Debit is one of the most efficient payment methods companies can use to collect debts conveniently and automatically. However, for the process to run smoothly and legally, a creditor identifier (creditor ID) is important.

In this article, you’ll learn what creditor IDs are, the benefits of having one, and who can apply. We also explain step-by-step how businesses in Germany can apply for a creditor ID.

What’s in this article?

• What is a creditor identifier?
  
• What are the special features of a German creditor identifier?
  
• Who can apply for a creditor identifier in Germany?
  
• What are the advantages of a creditor identifier?
  
• How can German businesses apply for a creditor identifier?
  

What is a creditor identifier?

A creditor ID is an identification assigned to individuals or companies who wish to collect money using the SEPA Direct Debit procedure. It’s a unique number used to clearly identify creditors or payment recipients, regardless of the account. It can also be used to request refunds or file complaints. The creditor ID is mandatory for participation in SEPA Direct Debit, as it ensures the security, transparency, and efficiency of payment transactions in the SEPA area.

A creditor ID follows a standardized structure, consisting of a country code, two-digit check number, business unit identifier, and national identifier. The creditor ID can be up to 35 characters long.

To collect SEPA Direct Debits, a business must present its creditor ID to the respective payment service provider. The creditor ID is transmitted along with the mandate reference number during the entire payment process in the SEPA data record. This combination of the mandate reference number and a creditor ID makes a mandate clearly identifiable. This allows debtors to check the validity of a SEPA Direct Debit mandate at any time.

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What are the special features of a German creditor identifier?

The creditor ID for German businesses always consists of exactly 18 characters:

• The first two digits are the International Organization for Standardization (ISO) country code for Germany: “DE.”
  
• The next two digits contain the check number. This is analogous to the International Bank Account Number (IBAN) check digit (ISO 13616)—but without taking the business unit identifier into account.
  
• The fifth, sixth, and seventh digits contain the business unit identifier (e.g., to identify specific business units or branches). This can be any alphanumeric character. If no area identifier is required, the three digits are usually filled with the letters “ZZZ.” Blanks and umlauts are not allowed.
  
• The remaining digits contain the national identification code of the creditor in ascending order. The eighth digit of the creditor ID is always set to “0.”
  

The creditor ID for a German company could, therefore, look like this:

DE98ZZZ09999999999

Who can apply for a creditor identifier in Germany?

Individuals, sole proprietorships, legal entities, or associations of persons who have their main residence or principal place of business in Germany can apply for a creditor ID. The application depends on the legal form. According to the Deutsche Bundesbank, the following groups of persons and legal entities are eligible:

What are the advantages of a creditor identifier?

A creditor ID has many benefits—and not just for payment recipients. Here is an overview of the most important ones:

Compliance with legal and regulatory requirements

The creditor ID is a mandatory component of the SEPA Direct Debit scheme. Its use ensures compliance with regulatory requirements and provides legal certainty to all parties involved in a direct debit transaction.

Smooth payment transactions

The standardized use of the creditor ID simplifies the payment process. The ID ensures consistent communication among all parties involved, including banks, debtors, and creditors.

Unique identification

Direct debit mandates must be uniquely identifiable in the SEPA process. The creditor ID, therefore, serves as a kind of “digital fingerprint.” It ensures all payees can be uniquely identified. In conjunction with the mandate reference number, the ID allows for the unambiguous allocation and management of direct debit mandates. This is particularly beneficial when there are discrepancies or complaints regarding direct debits that need to be monitored.

Use in the SEPA area

The creditor ID is not limited to national borders but is valid throughout the SEPA area. This is particularly advantageous for companies with international business partners. They can use SEPA Direct Debits across borders. The ability to automate payment processes saves companies time and reduces errors in processing direct debits.

Trust building

A creditor ID displays a sense of professionalism. It ensures that business partners can recognize that your business is compliant with SEPA and abides by the law.

How can German businesses apply for a creditor identifier?

German businesses can apply for a creditor ID online (not via writing or telephone) in just a few simple steps. The applicant or an authorized representative can submit the application. Authorized representatives can include employees of the company or account-holding payment service providers. Corporate entities can also apply for creditor IDs for their subsidiaries. Applicants can only apply for one creditor ID at a time.

The creditor ID is assigned by the Deutsche Bundesbank in coordination with the German Banking Industry Committee (DK). Assignment takes place regardless of the legal characteristics and economic situation of the applicants.

Access the form

The Deutsche Bundesbank provides the application form on its website. On the homepage, you will find a Creditor Identifier Procedure Description. Accept this and the data protection information by ticking the box. Then, click “Next.”

Select the group

You can then select the group of people for whom you want to request the creditor ID.

Choose your legal formation

Each group of people has different legal formations. Select the appropriate one in this step.

Fill out the form

On the form, the following information is required from the applicant:

• Salutation
  
• First and last name
  
• Street and house number
  
• ZIP code and city
  
• Issuing authority and location where the ID was issued
  
• ID number and expiration date
  

In addition, information about the contact person is required:

• Salutation
  
• First and last name
  
• Telephone number
  
• Email address
  

If the applicant’s information changes, they must request a new creditor ID. In this case, the old ID must be authorized for deletion in writing.

Confirm information

This step allows you to review and confirm the information you entered.

Complete security query

In the security prompt that follows, repeat the displayed character string in the input field, and confirm your entry.

Submit application

Next, click on the submit button. Your information will then be sent to the Bundesbank in encrypted form.

Confirm application

A few hours later—or the next business day—you will receive an email asking you to release the application data for further processing. You can do this by clicking on the confirmation link. Confirmation must be made within 10 calendar days, or the application data will be deleted. This means your application process will be canceled.

Receive creditor ID

Confirmation of your application will be followed by a separate email with your creditor ID as a portable document format (PDF) attachment. You will also receive this email a few hours after your confirmation or the following day at the latest. For security reasons, the notification letter is digitally signed.

Send creditor ID

Finally, send the PDF document or the creditor ID to your account-holding payment service provider as part of the SEPA Direct Debit authorization process. Be sure to keep the notification letter in a safe place. If you lose it, you can request a duplicate by mail from the Deutsche Bundesbank.