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SEPA direct debit

SEPA stands for the Single European Payments Area. This area was created with a view to improving efficiency in payment processes between different countries in the Euro Zone, and it aims to develop a series of common instruments, standards, procedures and infrastructures for everyone.

The countries included in the SEPA are: members of the European Economic Area comprising the twenty-seven members of the European Union plus Liechtenstein, Iceland, and Norway, Switzerland and Monaco.

Within this context, the ‘SEPA Debit’ was created, which allows for payments to be made/collected within SEPA countries with the following characteristics:

  • Only payments in euros.
  • No limit in terms of amount.
  • IBAN and BIC.
  • The debtor sends the debit order (mandate) to the creditor authorising the latter to initiate execution of the order.
  • The debtor and creditor must have an account held with a bank or financial entity located within the SEPA.

There are two modes: Core and B2B, the main difference being that the second mode is used by businesses and the first by private individuals. To find out more about the differences, go to the website of the European Payments Council.

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