A SEPA direct debit is a standardised European payment method that allows an organisation to automatically withdraw an amount from a customer's account with their consent. This consent is recorded in a mandate, and the direct debit can be one-off or recurring. There are two variants: a core direct debit for consumers and businesses, and a business-to-business direct debit that only works between businesses.
How does a SEPA direct debit work?
A SEPA direct debit works in fixed steps: the customer provides a mandate, you pre-notify the collection, and then you submit a direct debit order. This order goes via the creditor's bank to the debtor's bank, after which the amount is debited and credited to your account.
If the collection is unsuccessful, you will receive a notification. To collect as a business owner, you need a business account with a provider that supports direct debit, plus a direct debit contract with your own Creditor Identifier.
You submit the direct debit orders per scheme and per sequence type, meaning separated for one-off and recurrent direct debits. You submit the first debit of a recurring sequence separately, after which you process each subsequent collection as a recurring order.
You send the pre-notification to your customer at least 14 days before the debit, including the amount and the date. If something goes wrong, for example due to insufficient funds or a chargeback, the bank processes this as a separate failed transaction and you will either not receive the amount or it will be reversed.
The types of SEPA direct debit
The types of SEPA direct debit are divided into two schemes and two sequence types. The scheme determines who you can collect from and whether refunds are possible; the sequence type determines whether you collect as a one-off or recurring payment. Below are the standard variant, the business variant, and the difference between a recurring and a one-off direct debit.
Standard SEPA Direct Debit (Core)
The standard SEPA direct debit, also called Core, is usable for both consumers and businesses. The customer retains protection: a debit that is incorrect may be refunded up to 8 weeks after the date without giving reasons. This makes Core the most commonly used variant for subscriptions and recurring invoices to private individuals.
Business SEPA Direct Debit (B2B)
The business SEPA direct debit, also called B2B, works exclusively between businesses. Refunds are not possible here, which gives you more certainty about the payment. In return, there is extra administration: your customer must also register the mandate with their own bank before you can collect.
What is a recurring SEPA direct debit?
A recurring SEPA direct debit is a mandate with which you may debit multiple times, for example every month or every year. With a one-off direct debit, you debit only once and the mandate expires afterwards. Choose recurring for fixed contracts and subscriptions, and one-off for a single payment.
What is a SEPA direct debit mandate?
A SEPA Direct Debit mandate is the recorded consent with which a customer authorises you and their bank to debit amounts.
Without a valid mandate, you are not allowed to collect, and a customer can have a debit without a mandate reversed up to 13 months later via a Notification of Unauthorised Direct Debit. According to the Dutch Payments Association (Betaalvereniging Nederland), the mandate must meet fixed requirements and be stored digitally in your administration.
You record the mandate on paper or via an officially recognised digital direct debit mandate with your bank. A simple checkbox on a website does not count as legally valid consent, so ensure you have a physical signature or the digital equivalent.
What must be included in a SEPA mandate?
A SEPA mandate always contains the same mandatory information, clearly separated from the rest of the form. The most important components are:
Title with SEPA: the heading states the type, for example recurrent or one-off SEPA mandate.
Creditor ID and mandate reference: your unique creditor ID plus a reference of up to 35 characters that is unique to each mandate.
Customer details: the name, address where required, and the IBAN of the account holder you are collecting from.
Consent text and signature: the standard text authorising the debit, with place, date, and signature.
What is a creditor ID?
A creditor ID is the unique number that identifies you throughout the SEPA area as a party authorised to collect direct debits. For Dutch companies, it consists of 19 characters and is derived from your Chamber of Commerce (KvK) number.
You receive the creditor ID when you conclude a European direct debit contract with your bank or payment provider, and you include it with every direct debit instruction.
How do you start with SEPA Direct Debit yourself?
You start with SEPA direct debit by first arranging the collection with your bank or payment provider and then collecting mandates. The most important steps at a glance:
Arrange a direct debit contract: request a European direct debit contract from your bank or provider and receive your creditor ID.
Set up a mandate: create a mandate form that meets the SEPA requirements and have your customer sign it.
Send the pre-notification: inform your customer at least 14 days in advance of the amount and the date.
Submit the direct debit order: send the order via your provider or accounting software, separated by variant and sequence type.
If you are currently using another provider, a switching service will take your current direct debits with you when switching to another business account. This way, your debits will continue and you do not have to set up existing payment agreements again.
Can you reverse a SEPA direct debit?
Refunding a SEPA direct debit means having a debit reversed, and with the standard variant, this can be done within 8 weeks without giving a reason. This 56-day period applies to Core direct debits; the amount will then be back in the account the next business day.
A business-to-business (B2B) direct debit cannot be refunded: it can only be refused in advance or blocked on the day of debiting. If the customer believes there was no valid mandate, a longer period of 13 months applies via a Notification of Unauthorized Direct Debit.
SEPA Direct Debit for recurring payments
SEPA Direct Debit is particularly suitable for recurring payments, where you collect the same or a variable amount from regular customers. Think of subscriptions, service contracts, rent, tuition fees and periodic invoices to regular buyers.
Associations and foundations also make frequent use of direct debit: an association collects contributions from a business account for your association and a foundation collects donations from a business account for your foundation. You do not have to wait for someone to transfer the money themselves, which makes your cash flow more predictable and simplifies your debtor management.
Benefits of SEPA Direct Debit
The benefits of SEPA Direct Debit revolve around certainty, time savings and less manual work in your administration. As a creditor, you take the initiative for the payment yourself, making your income more predictable and making collection a fixed, professional agreement with your customer. The main benefits of a SEPA Direct Debit at a glance:
Control over timing: you decide when to debit, ensuring payments arrive on time and meaning you spend less time chasing invoices.
Less administration: you no longer need to check manual bank transfers and have fewer outstanding payments to deal with.
Works across the entire SEPA zone: you collect from a customer in Germany or Belgium in the exact same way as in the Netherlands.
Set up SEPA Direct Debit with your GoDutch business account
With the GoDutch business account, you can arrange SEPA direct debits directly from your account. You can initiate both the standard Core direct debit and the business B2B direct debit, and pay incoming direct debits from the same account. This allows you to manage your incoming and outgoing payments in one place, without the need for a separate direct debit package.
You can apply for the account in 3 minutes and have your IBAN and card within 1 day. The app links with your accounting system, matches transactions automatically, and tracks your expenses in real-time, so that direct debits and invoices come together in the same overview.
If you operate from a private limited company (bv), the business account for your bv aligns with the business direct debit between companies, featuring shared access for your team.
Get started with your GoDutch business account
Want to get started with a business account that combines direct debits, cards and your bookkeeping? GoDutch sets up your account quickly, with a free entry-level package without fixed monthly costs and 24/7 service from real people. You open an account for free and expand as your business grows.
FAQ
Frequently asked questions about SEPA direct debit
What does SEPA stand for?
SEPA stands for Single Euro Payments Area, the uniform European area for payments in euro. Within this area, the same rules apply for transfers and direct debits in all participating countries, such as the Netherlands, Germany and Belgium. As a result, collecting from a foreign customer in euro is just as easy as collecting from a Dutch one.
How far in advance do you need to announce a SEPA Direct Debit?
You must announce a SEPA direct debit to your customer at least 14 days before the collection, including the amount and the date. You may agree on a shorter period with the customer, but this must be recorded in writing. This pre-notification applies to both one-off and recurring direct debits.
How long does a SEPA direct debit mandate remain valid?
A SEPA direct debit mandate remains valid as long as you use it, but expires if you do not submit a direct debit collection for 36 months. After that, you may no longer collect on that mandate and you must ask the customer for a new one. Keep the mandate digitally in your records for as long as you collect.
Can you stop a SEPA direct debit?
As an account holder, you can always stop a continuous SEPA direct debit, so that an organisation can no longer debit amounts. You can arrange this through your account provider or online banking. You do not have to pay an unjustified debit; you still owe a justified bill and must pay it in another way.
Do you need a business account to collect payments yourself?
Yes, direct debit collections cannot be made from a personal account: you need a business account and a direct debit contract. That contract provides you with the creditor ID with which you can submit orders to the bank. You can arrange this through an account provider that supports direct debit, or through a payment service provider that works with its own creditor ID.
What happens if a SEPA direct debit fails?
A SEPA direct debit usually fails due to insufficient funds in the customer's account. The bank reports the failed debit and the payment does not go through. The claim remains: you may collect again or agree on how the customer will still pay, and sometimes the bank charges fees for the failed direct debit.
