SEPA Direct Debit


Many people are familiar with the SEPA direct debit procedure from their everyday payments. There is no great science behind the quick and uncomplicated collection order. Still, it is worthwhile for everyone to know more precisely what happens to their money when it is conveniently debited after incoming approval.

Definition of SEPA Direct Debit

What does the term SEPA actually stand for? SEPA stands for “Single Euro Payments Area” and thus describes the uniform EURO payment traffic area. Within this payment traffic area (currently 34 countries), a uniform procedure for cashless payments in the EURO currency has been created.

Direct debit orders and direct debit authorization have become obsolete.

The SEPA direct debit has replaced two classic German procedures that still sometimes appear in colloquial language today: the direct debit order and the direct debit authorization. The two systems were in use until 2014 and differed in the right of objection factor: with the direct debit authorization, the debtor could object to the collection up to a few weeks after the debit. With the direct debit order, this option did not exist.

The new standard: the SEPA procedure

In the course of European standardization efforts, the two direct debit procedures were transformed into the SEPA direct debit procedure that is commonly known today. However, the distinction in the right of objection is still relevant: There is still an eight-week objection period in the SEPA core direct debit procedure. In contrast, this objection option does not exist for the SEPA business-to-business direct debit – which, as the name suggests, is aimed only at corporate and business customers.

Advantages of the SEPA Direct

The SEPA direct debit is very convenient, especially for recurring payment transactions. Such an open-ended direct debit mandate is often used concerning rent payments, Abonnements (online or analog), insurance, etc. The payer does not have to constantly set up and check his outgoing payments, and the payee has the security of receiving his money on time and in a way that can be planned regarding accounting. Of course, the account must be covered for the direct debit. In addition, the SEPA direct debit procedure is unbeaten in terms of planning security, dunning prevention, and – quite fundamentally – cashless Zahlungsabwicklung, especially as it is offered free of charge.

Secure, fast, reliable, and transparent

The SEPA direct debit is also considered exemplary in terms of security standards. Unique reference numbers ensure the greatest possible transparency. Direct debits can even be revoked for up to thirteen months when no mandate has been issued in advance. Germany even has its own SEPA Council under the guidance of the Federal Ministry of Finance and the Bundesbank. Moreover, the procedure is also lightning fast: only one day’s transfer time is allowed. This makes for excellent planning on both sides.

Payment processing by Compay GmbH

As one of the most popular payment options in everyday business, e-commerce or online community platform operators offer SEPA direct debit to their end customers. In doing so, such merchants resort to payment service providers who take over the complete payment processing. Compay GmbH has been offering its comprehensive services in the online sector for a good ten years. These include extensive Zahlungsmöglichkeiten, Abonnenments, Zahlungserinnerungsfunktionen, age verification, and security measures against abuse and fraud attempts.