How do credit and direct debit differ?

Direct debit - auxmoney financial lexicon

The SEPA direct debit

SEPA is the abbreviation for “Single Euro Payments Area”. It is a project between the EU, the European Free Trade Association, Monaco and San Marino to standardize cashless payments. In this way, cashless payments can be made uniformly across Europe. Since November 1, 2010, all EU credit institutions have been obliged to implement the SEPA direct debit. Whereas primarily only international transactions were carried out via SEPA direct debits, these have also been in effect for national money transfers since February 2014. The original direct debit types are replaced by two new ones: the basic direct debit and the corporate direct debit.

The SEPA core direct debit contains essential elements of the former direct debit authorization procedure. However, different from the direct debit authorization procedure, certain due dates apply to the SEPA core direct debit. Initial direct debits must be submitted to the respective bank five days, recurring direct debits at least two days before the due date. In addition, there is a right of objection for direct debits with the so-called SEPA direct debit mandate for up to eight weeks. For direct debits without a mandate, there is even a right of objection of 13 months.

A SEPA B2B direct debit is exclusively limited to traffic between business customers. A due period of one day applies to one-off, first-time and recurring direct debits. The SEPA B2B direct debit is not allowed for consumers and there is no right of objection, as the mandate data must be checked before the debit.