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Glossary of SEPA Direct Debit terms

Rob Keating
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Last editedMay 2022

Explanation of the key terms used in SEPA Direct Debit

Term Meaning
Acceptable equivalent An electronic channel offering a security level considered sufficient by the merchant’s bank and accepted in the EPC e-Operating Model for e-Mandates.
Pre-notification Notice that must be given, under the Scheme rules, to customers of each payment before it leaves their account.
BIC (Banking Identifying Code) A code developed by the International Organization for Standardization (ISO) to identify banks and their branches.
Bureau An organisation that submits Direct Debit requests to the bank on behalf of a 3rd party, who may or may not have their own Creditor Identifier.
Calendar days A calendar day is any day of the year.
Refund A payment refunded to the payer. Customers who claim a refund within the relevant time limits will be refunded immediately and in full.
Creditor Identifier A unique identifier issued to every Creditor under the SEPA Direct Debit scheme.
e-Mandate Process for authorising a SEPA Direct Debit mandate online, instead of with a paper form.
IBAN (International Bank Account Number) International Bank Account Numbers (IBANs) are the international bank account numbers assigned to you and your customers. You can find your IBAN on your account statement or via Internet Banking.
Interbank business day An inter-bank business day is when banks are open for business between banks. The 'Trans-European Automated Real-time Gross Settlement Express Transfer System' (TARGET) calendar is used to identify inter-bank business days. To avoid frequent changes to TARGET closing days, due to national holidays for example and thus the introduction of uncertainties into financial markets, a long-term calendar for TARGET closing days has been established and applied since 2002. This calendar is published by the European Central Bank.
ISO 20022 ISO 20022, the International Organisation for Standardisation, use XML as the international standard format for payment messages.
Mandate An authorisation from your customer to collect future payments automatically. To set up a mandate your customers must complete a standardised form.
Mandate form A paper form that customers must complete to authorise a mandate to you.
Mandate related data The data elements from the mandate which should be included with each collection.
Microenterprise An enterprise which employs fewer than 10 persons and whose annual turnover and/or annual balance sheet total does not exceed EUR 2 million.
Modulus Check A procedure for applying a mathematical algorithm to an Account Number (or an account number and Sort Code combination) to check that it is valid.
SEPA The Single Euro Payments Area (SEPA) is a payment-integration initiative of the European Union for simplification of bank transfers denominated in euro.
Sponsor Bank A bank that enables you to access the Direct Debit Scheme and provides you with a Creditor Identifier.
Unauthorised Transaction A SEPA direct debit is deemed to be an unauthorised transaction if:
  • No mandate exists.
  • The mandate was invalid.
  • The mandate has expired (no transactions for 36 months).
Unique Mandate Reference This reference identifies for a merchant each Mandate signed by any of their customers. This number must be unique for each Mandate in combination with the identifier of the Creditor.
XML format XML is a mark up language that is both human and machine readable. This means that if you look at a XML document you will be able to see information including, your payment batch information, your supplier name and IBAN information.

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