The software costs something different every month, the electricity bill varies, and subscription customers should not have to transfer money themselves each time. This is what the SEPA direct debit is for. With it, the payee collects the amount once the payer has authorised them to do so. For businesses, the SEPA direct debit is therefore both: a convenient way to pay recurring bills and a tool for collecting money from customers.
This article explains how a SEPA direct debit works, what the direct debit mandate must contain and how the Core and B2B schemes differ. It then covers the deadlines for a refund and how to limit or block direct debits from your own account.
Key points at a glance:
- With a direct debit, the payee collects the amount on the basis of the payer’s mandate; the SEPA direct debit only works in euro.
- Before each collection, the payee announces the amount and date, according to the Ministry of Social Affairs 14 calendar days in advance unless something shorter is agreed.
- Under the Core scheme, the payer can request a refund within eight weeks without giving reasons, and for an unauthorised collection for at least 13 months.
- Under the B2B scheme, there is no refund for authorised collections; instead, the payer’s bank checks the mandate before the collection.
- If the payer or the payee is a consumer, the payer can instruct their bank to limit direct debits, block certain payees or allow only certain ones.
What is a SEPA direct debit?
What is a direct debit? According to the consumer portal of the Ministry of Social Affairs, the direct debit scheme is meant for regular payments whose amount changes, such as electricity or phone bills. The payer authorises the business to collect the amounts owed from their account. Because the payee initiates the money transfer, it is called a pull payment, unlike a credit transfer or a standing order, which the payer triggers.
Banks today only process direct debits as SEPA direct debits (SEPA-Lastschrift). They work for payments in euro across the whole European Economic Area, and the payer’s bank must keep the account reachable for direct debits from payees in all EEA states. According to the European Payments Council (EPC), which sets the schemes, a SEPA direct debit is suitable for one-off and recurring payments; according to its own figures, more than 21 billion transactions run via SEPA direct debit every year. The three payment types compared:
| Direct debit | Standing order | Credit transfer | |
|---|---|---|---|
| Who initiates the payment | The payee | The payer, set up once | The payer, each time |
| Amount | Can change | Fixed amount | Free for each payment |
| Basis | The payer’s mandate | Order to your own bank | Order to your own bank |
| Payer protection | Core scheme: refund within eight weeks | No reversal by the bank once executed | Different protection rules than for direct debits |
The difference in reversal matters in practice. The consumer portal points out that the bank cannot reverse a debit by standing order even if the payee is no longer entitled to it, for example after a cancellation; the money must then be reclaimed directly from the payee. With a direct debit, by contrast, the scheme protects the payer, because they set neither the timing nor the amount of the collection.
For businesses as payees, the EPC mainly cites efficiency: payments run automatically, invoices are paid on their due date, and the money can be directed to a single account. Collection is always in euro, but according to the EPC the accounts involved can also be held in another SEPA currency. As account details, the payer only has to give their IBAN for the mandate, according to the consumer portal, and it is solely decisive for execution.
The direct debit mandate and its required details
Every SEPA direct debit is based on the direct debit mandate (Lastschriftmandat), also commonly referred to as a direct debit authorisation (Einzugsermächtigung). According to the EPC, the payee prepares the mandate and the payer signs it, on paper or electronically. The consumer portal, however, names the payer’s handwritten signature as a requirement for a valid mandate. The original is kept by the payee, not by the bank. Payees can use a SEPA direct debit mandate template for this and then send it to their customers for their signature.
The annex to the SEPA Regulation sets out which details a collection must carry. According to it, the payee transmits with the collection, among other things:
The mandate is not valid indefinitely. According to the consumer portal, it becomes invalid if it was not signed by hand or a required detail is missing, and it expires if the payee has collected nothing for 36 months. The payer can also revoke their direct debit mandate at any time without giving reasons. A collection after revocation counts as unauthorised.
Pre-notification before each collection
Before the account is debited, the payer must, according to the Ministry of Social Affairs, be informed of the exact date and amount of the collection, for example with a note on the invoice. For this pre-notification (Vorabankündigung), a period of 14 calendar days before the collection applies, unless both sides have agreed a shorter period. The payer can then prepare for the debit and make sure there are sufficient funds.
If a business regularly collects a fixed amount, a single notice stating the amount and frequency is enough. If you collect direct debits yourself, it pays to build the pre-notification firmly into the invoice template so that it is never missing from a collection.
Mandate reference and creditor ID
Every mandate can be identified unambiguously by two identifiers: the mandate reference and the payee’s identification number, usually called the creditor ID (Gläubiger-ID) in payments. According to the EPC, the combination of mandate reference and creditor ID allows every collection to be traced immediately and unambiguously to the business that initiated it. Payment service providers must also ensure that only trustworthy payees collect direct debits; the risk of fraudulent or erroneous collections is borne by the payee’s payment service provider, never by the payer.
If you collect direct debits yourself, this means: the unique mandate reference is on the mandate and, according to the SEPA Regulation, is one of the details that every collection carries, as is the payee’s identification number. This makes every debit traceable to a specific mandate.
Core and B2B direct debits compared
The EPC has defined two schemes: the SEPA Core direct debit (Basislastschrift) and the SEPA B2B direct debit (Firmenlastschrift). The Core scheme is designed primarily for consumers but is also open to businesses. The B2B scheme is exclusively for business customers as payers; according to the EPC, a private individual can, however, be the payee. The differences according to the EPC:
| Core direct debit | B2B direct debit | |
|---|---|---|
| Payer | Consumers and businesses | Businesses only |
| Refund for an authorised collection | Within eight weeks without giving reasons | No refund |
| Unauthorised collection | Refund: 13-month deadline | No collection without a checked mandate |
| Mandate check by the payer’s bank | No, the mandate data arrive with the first collection | Yes, before the collection |
| Final | Refund still possible within the deadlines above | Three business days after the debit date |
| Offered by the bank | Mandatory for banks offering euro direct debits to consumers | Optional |
Under the B2B scheme, the payer’s bank must have confirmation of the mandate data from the payer before the first collection and must store this data. Within three business days of the debit date it can still return the direct debit for specific reasons; after that, the payment is final. For payees, the B2B scheme therefore brings more certainty, while payers lose the right to a refund. Because banks do not have to offer the B2B scheme, it is worth checking in advance whether both sides can use it.
How a SEPA direct debit works
From signature to credit, a SEPA direct debit goes through five steps, as they follow from the information provided by the EPC and the Ministry of Social Affairs:
The payee prepares the mandate, and the payer signs it on paper or electronically.
Before each collection, the payee informs the payer of the amount and date, for example on the invoice.
The payee sends the collection with the mandate reference and creditor ID via its payment service provider to the payer’s bank.
On the agreed day, the payer’s account is debited and the amount is credited to the payee.
Under the Core scheme, the payer can request a refund within eight weeks; under the B2B scheme, the payment is final after three business days.
Reversing a direct debit: deadlines and rights
Having a direct debit reversed is an explicit right under the Core scheme. Under the EU Payment Services Directive, payers in principle have an unconditional right to a refund for SEPA direct debits, within eight weeks of the debit. The bank must then refund the full amount within ten business days; under the Directive, it may not refuse this unconditional refund. According to the Ministry of Social Affairs, the refunded amount is automatically reclaimed from the payee.
The deadline is longer if a collection was not authorised at all. In that case, according to the consumer portal, the payer can request a reversal for at least 13 months, and without a mandate even after that. A collection counts as unauthorised, for example:
For payees, the eight-week deadline under the Core scheme means that a collected amount can leave the account again within this period. With a valid contract, the claim still stands, as oesterreich.gv.at points out. Anyone who does not want to carry this uncertainty for collections from business customers should look at the B2B scheme as an alternative.
According to the consumer portal, one case is common in practice: customers only give their account details by phone or online and do not sign a mandate. Because a SEPA direct debit mandate is only valid with a handwritten signature, they can have such collections reversed for at least 13 months. Their contractual obligation to pay for services properly provided remains unaffected. For payees, this is a reason to always obtain complete, signed mandates.
When the account is not covered
If a direct debit cannot be executed due to insufficient funds, the payer’s bank charges a fee according to the Ministry of Social Affairs, and the payee usually invoices reminder and default costs. The consumer portal therefore advises giving mandates only if sufficient money can be expected in the account. For businesses as payers, the pre-notification helps to ensure funds in good time.
Limiting or blocking direct debits
Because the bank does not check under the Core scheme whether every collection is backed by a valid mandate, the SEPA Regulation gives the payer their own control rights. The bank must apply them if the payer or the payee is a consumer; between two businesses, it is not obliged to. The payer can instruct their bank:
In short: A SEPA direct debit needs a signed mandate and a pre-notification. Under the Core scheme, a refund deadline of eight weeks applies; under the B2B scheme, the bank checks beforehand and does not refund afterwards.
Direct debits with the Vivid business account
In the Vivid business account, transferring direct debits is free in all plans: according to the plan overview, direct debit arrangements from another bank account can easily be moved to the Vivid account, meaning direct debits that have so far been debited from the other account. According to the Help Centre, this is made possible by a partnership with Qwist GmbH; whether it works from the previous account in an individual case becomes clear during the transfer. At a glance:
Even in the plans without a monthly basic fee, some services can incur charges. These include additional cards, cash withdrawals above certain free allowances or premium features from higher plans.
Vivid in brief: an online business account for companies and the self-employed in Austria, in which existing direct debits can be transferred free of charge.
Recurring payments in one place
Open the Vivid business account online and transfer existing direct debits at no extra cost.
Frequently asked questions
What is a SEPA direct debit?
A payment in euro in which the payee collects the amount from the payer’s account on the basis of the payer’s mandate. It is suitable for one-off and recurring payments across the EEA.
What must a SEPA mandate contain?
The SEPA Regulation sets out which details every collection carries. These include, among other things, name and IBAN of the payee and payer, the unique mandate reference, the date the mandate was signed, the creditor ID and the type of direct debit.
How long can a direct debit be reversed?
Under the Core scheme, within eight weeks without giving reasons. If the collection was not authorised, for at least 13 months.
What is the difference between Core and B2B direct debits?
The B2B scheme is only for businesses as payers. The bank checks the mandate before the collection, and there is no refund for authorised collections. The Core scheme has the eight-week deadline.
What is a pre-notification?
The information about amount and date before the collection, for example on the invoice. According to the Ministry of Social Affairs, 14 calendar days apply unless something shorter is agreed.
Can a direct debit mandate be revoked?
Yes, at any time and without giving reasons. A collection after revocation counts as unauthorised.
Can direct debits be blocked?
Yes, if the payer or the payee is a consumer. The bank can then, on the payer’s instruction, block all direct debits. It can also allow or exclude only certain payees and limit collections to an amount or a frequency. Between two businesses, the bank does not have to offer this.
This article is for general information and is not legal advice. The rules mentioned come from the information published by the Ministry of Social Affairs on konsumentenfragen.at, by oesterreich.gv.at and by the European Payments Council, and from the EU Payment Services Directive and the SEPA Regulation; each bank sets its own specific conditions. Payment services are provided by Vivid Money S.A., 21 rue Glesener, Luxembourg, L-1631, Luxembourg, an Electronic Money Institution authorized and regulated by the Commission de Surveillance du Secteur Financier, Luxembourg, under the register number W00000015.
