What is a SEPA Credit Transfer?
A SEPA Credit Transfer (SCT) is a credit transfer system used across Europe. SCT is now used in the SEPA zone instead of the previous domestic and cross-border Euro Credit Transfers (CT) that were once used. By introducing the SEPA Credit Transfer system payments are now consistent throughout Europe. Making a SEPA Credit Transfer is as easy and straight forward as receiving a domestic ACH transfer. In 2016 when the updated version 8.2 of the SEPA Credit Transfer Rulebook was published all technical and functional points remained unchanged.
How long does it take to do a SEPA Credit Transfer?
SEPA Credit Transfers take a maximum of three days although they can be processed in one day depending on the time of day you make the transfer. There is a 15:00 cut off time so that if you make the transfer before 15:00 your transfer can happen on the same day. If your transfer request is made after the cut off time of 15:00 it will be processed on the next Banking Day.
How does the SEPA Direct Debit scheme work?
SEPA Direct Debit (SDD) is a direct debit scheme used throughout Europe allowing merchants to accept Euro-denomination payments from accounts using the SEPA payment system in all eurozone and non-eurozone SEPA countries and associated territories.
For consumers the SDD system means that their transactions are now automated. There is no risk of missing a payment or being late for a payment and so no risk of being charged a late-payment fee or being at the mercy of service interruptions. When a customer has a recurring payment that needs to be made on time each month the SDD system handles it automatically bringing the customer peace of mind. Not only does the customer know that the payment will be made on time but they also have the security knowing that there is a straightforward and timely refund procedure if necessary.
For businesses the SDD system’s automated payment processing means efficiency gains, optimization of cash flow and prompt payment of invoices when due. As the system is standardized trade can occur smoothly across borders throughout Europe thus supporting a functioning single market.
What does a SEPA Direct Debit entail?
SDD operates on a pull model meaning the merchant initiates the payment only once the customer has given his authorization (SEPA Direct Debit Mandate) for the payment to be collected from their Euro-denomination bank account. SEPA Direct Debit does not use a card network but rather operates as a bank-to-bank transfer directly between banks. The information and legal wording used in the mandate is specific (see here) and explicitly lays out the refund terms under the relevant SEPA Direct Debit scheme. For example the SEPA Direct Debit Mandate provides protection for customers requesting regular scheduled payments to insure against fraudulent or mistaken deductions. We have provided a SEPA Customer Protections guide for your convenience.