In SEPA Direct Debit Core, your business initiates the collection through its provider, the clearing and settlement mechanism forwards it, and your customer’s provider debits their account (SEPA Direct Debit Core Scheme Rulebook). Understanding SEPA direct debit transaction roles lets you distinguish your customer notice from the collection instruction you send to your provider. You can also separate settlement between providers from the timing of the credit to your business account.
Start with the groundwork in our earlier article: SEPA Direct Debit vs bank transfer for recurring euro payments
Who sends what to whom in a SEPA Direct Debit Core collection, from my customer’s authorisation to settlement?
Your customer gives you the mandate authorising the collection, and you receive and store it as the Creditor (European Payments Council AISBL). You then send collection instructions, including mandate-related information, to your Creditor PSP (your payment service provider, or PSP, on the collecting side), which sends them onwards through the clearing and settlement mechanism to the Debtor PSP.
SEPA Direct Debit Core collections are in euro; B2B collections and sterling direct debits are outside the scope here (European Payments Council AISBL). Your Creditor PSP is on the collecting side, while the Debtor PSP holds the account being debited.
The mandate authorises both you, as the Creditor, and the Debtor PSP to debit your customer’s account (European Payments Council AISBL). Your customer gives that authorisation to you, rather than sending the collection instruction themselves.
Your pre-notification tells the customer the amount and date on which the collection will be presented to their PSP for debit (European Payments Council AISBL). You generate the collection data and pre-notify your customer of when the collection will be presented to their PSP for debit. The instruction you send to your provider includes mandate-related information, rather than being only a request for a payment amount.
Between you and your customer, the mandate can be exchanged on paper or electronically (European Payments Council AISBL). Between scheme Participants, only electronic handling of mandate information is permitted.
The clearing and settlement mechanism, or CSM, checks and accepts files containing collections before forwarding the collections to the Debtor PSP (European Payments Council AISBL). The Debtor PSP debits your customer’s account on the specified due date and makes information about the executed direct debit available as agreed. Settlement credits the Creditor PSP on the due date, but the scheme does not determine when your business account is credited. Your customer has full discretion to accept or refuse a mandate. The PSPs are not bound by your underlying customer contract; their involvement concerns their agreements with you and your customer on the terms and conditions for delivering direct debit services. Inter-PSP settlement debits the Debtor PSP while crediting the Creditor PSP. Confirm with your provider when your business account will be credited before relying on a payout date.
Under the Core rulebook published by the European Payments Council on 5 October 2025, the Debtor PSP must receive a collection no earlier than 14 calendar days before its due date (European Payments Council AISBL). The same rulebook sets the latest receipt point at one inter-PSP business day before that date. These boundaries govern receipt by your customer’s PSP, not submission by your business to its provider.
Who sends what in a normal Core collection
Sender | What they send or do | Recipient or account affected |
|---|---|---|
Customer (Debtor) | Gives the mandate authorising collection and account debit | Business (Creditor) |
Creditor | Pre-notifies the collection amount and date | Debtor |
Creditor | Sends collections including mandate-related information | Creditor PSP |
Creditor PSP | Sends the collections onwards | Clearing and settlement mechanism |
CSM | Forwards accepted collections so they reach the Debtor PSP within the receipt window before the due date | Debtor PSP |
Debtor PSP | Debits the instructed amount on the due date | Debtor's account |
Can my UK business use SEPA Direct Debit Core, and what must our accounts support?
The United Kingdom remains within SEPA’s geographical scope following Brexit, and eligible local institutions may adhere to the SEPA schemes through the relevant EPC adherence procedure (EPC list of Countries in the SEPA Schemes’ Geographical Scope). The account being debited must be designated to accept collections, so establish that account condition before relying on the collection arrangement (European Payments Council AISBL).
Eligible local institutions can adhere to the schemes through the EPC’s relevant adherence procedure; inclusion of a country is not itself that adherence (European Payments Council).
Ask your provider to confirm the scheme Participant arrangement for your account and the eligibility of the account from which you intend to collect (European Payments Council AISBL). Your provider question should cover both account relationships, because you and your customer must each hold an account with a scheme Participant located within SEPA, and the customer’s account must be designated to accept collections.
Ask your provider which submission cutoff lets your collection reach the Debtor PSP within the receipt window that the rulebook sets, as described above (European Payments Council AISBL). Ask your provider explicitly to confirm its arrangement for offering SEPA Direct Debit Core collections to your business.
Who sends the messages and handles the money if a collection is rejected, returned or refunded?
Your Creditor PSP, the CSM or the Debtor PSP can reject a collection during processing (European Payments Council AISBL). For a Return or Refund, messages travel from the Debtor PSP through the CSM to the Creditor PSP, which debits you for the returned or refunded collection.
A rejection by the Debtor PSP happens before inter-PSP settlement (European Payments Council AISBL). If you correct and present a rejected recurrent collection again, it must still be presented as a recurrent collection.
For a post-settlement Return, the Debtor PSP sends the returned collection back to the CSM (European Payments Council AISBL). The CSM forwards it to your Creditor PSP, which debits you for its amount.
For a Refund, your customer instructs their PSP to reimburse the debited amount (European Payments Council AISBL). The Debtor PSP credits the customer’s account and sends Refund messages to the CSM. The CSM sends the collection Refunds to your Creditor PSP, which debits you for the refunded collections.
You handle the disputed collection directly with your customer, without the PSPs’ involvement in that dispute (European Payments Council AISBL). The underlying contract is between you and your customer, separately from the collection transaction. Your customer may also instruct a Refusal to the Debtor PSP, rather than initiate a Refund of an amount already debited.
Sources
- SEPA Direct Debit Core Scheme Rulebook, European Payments Council AISBL, 05 October 2025
- EPC list of Countries in the SEPA Schemes’ Geographical Scope, European Payments Council, 24 December 2025