SEPA Mandate Guide for Creditors and Debtors

What is the SEPA mandate?

The SEPA (Single Euro Payments Area) mandate is an authorization that allows a  creditor , such as a supplier or vendor, to debit funds directly from the debtor’s bank account within the European Union and other participating countries. The direct debit mandate is a document issued by the debtor containing the required mandatory data and authorizing the creditor to make periodic collections in an automated manner.

The main objective of the SEPA mandate is to unify and facilitate cross-border payments within the SEPA area, ensuring the security and efficiency of transactions between member countries. This system includes the 27 countries of the European Union, plus Andorra, Vatican City, Monaco, the United Kingdom, San Marino, Switzerland, Iceland, Liechtenstein and Norway.

The difference between the SEPA mandate and the SEPA document lies in their function: the SEPA mandate is the order that allows the collection to be made, while the SEPA document is simply the form that is completed to formalize said authorization. This form varies according to the type of debit, but in all cases, the signed mandates must comply with the established requirements to be valid and have legal backing in case of disputes.

Types of SEPA mandate

There are two ways to implement the Single Euro Payments Area mandate: SEPA Core Mandate and SEPA B2B Mandate. Let’s take a look at them.

Sepa Core Mandate

The SEPA Core mandate is designed for transactions between consumers and  businesses . It allows creditors to collect recurring payments such as bill payments, rent or subscriptions, by direct debiting the debtor’s account. The vast majority of merchants that accept direct debits accept the SEPA Direct Debit method.

For the order to be executed correctly, the debtor must sign the direct debit order, either electronically or physically, and submit all the required data to his bank. The creditor, for his part, must keep the signed mandate in order to reflect any future modifications or cancellations.

It is important to take this into account whether it is an electronic or traditional signature. This scheme uses the specific  ISO 20022 XML format , and is classified according to the type of debt:

• FRST (first payment)
• RCUR (recurrent)
• OOFF (one-time payment)
• FNAL (last payment)

In the case of one-off debits, the request must be submitted to the bank at least 7 business days before collection. For recurring debits, the deadline is 4 business days.

To illustrate how it works, let’s take an example. A resident of Spain who regularly buys imported food on a monthly basis can generate a SEPA Mandate so that the company located in another country (Germany) can automatically  philippines email list  collect the payment. Of course, this can work regardless of whether it is a one-off or recurring payment.

SEPA B2B Mandate

The SEPA B2B Mandate is used exclusively for business-to-business transactions or between a sole proprietor and a company. It is mainly used for recurring payments such as loan repayments or large purchases. Unlike  how to install a wordpress plugin – 4 methods (step by step) the SEPA Core Mandate, the B2B Mandate does not allow payments to be returned once they have been authorised, which provides greater security for creditors.

The SEPA B2B mandate must be issued and signed by both parties, and the bank that receives the direct debit mandate is obliged to keep the document for as long as the mandate is valid. In addition, it is mandatory that these whatsapp number  transactions be carried out in euros and only between business entities within the SEPA area, excluding end consumers.

How do I fill out a SEPA mandate?

The process for completing a SEPA mandate varies depending on the type (Core or B2B), but both must meet certain basic requirements and contain detailed information for their correct execution:

1. Creditor details :
   • Creditor name : full name of the entity that will collect the payments. Example: “Servicios Energéticos, SA”
   • Creditor ID : The creditor identification number (ID), which is mandatory. This number can be provided by the entity that is collecting the debt.
   • Full address : Add the creditor’s mailing address, including street, city, and zip code.

   • Debtor’s data :

     • Name of the debtor : full name of the person or company authorizing the collection. Example: “Juan Pérez García” or “Company XYZ, SL”
     • Full address : postal address of the debtor.
     • IBAN account number  – you must provide the IBAN of the account from which payments will be made. Please ensure that the IBAN is correct and belongs to the mandate holder.
     • BIC : optional, but in some cases the BIC (Bank Identifier Code) is requested, which identifies the bank.
2. Mandate Reference – This field can be provided by the creditor and serves to uniquely identify the mandate. Example: “Ref825859852”.
3. Date and place of signature : it is necessary to indicate the date and place where the mandate is signed. Example: “Madrid, September 12, 2024”.
4. Signature of the debtor : the debtor must sign the mandate to authorize the direct debit. If it is a company, it may be necessary to include the signature of an authorized representative.

In the case of a SEPA Core Mandate, the form must include an authorization for the debtor’s bank to process the debit instructions. The debtor has the right to request a refund of any unauthorized transaction within eight weeks of the debit.

Formats in which a SEPA mandate can be generated:

• Paper format : This is the most common format, where the debtor physically signs the document.
• Electronic format : In some cases, an electronic mandate is permitted, signed using electronic authentication mechanisms, such as digital signatures or validations through secure platforms.