SEPA Direct Debit for merchants

SEPA Direct Debit (SDD) is a great option for merchants to accept payments
In addition to other payment methods (such as credit transfers), merchants can accept payments with SEPA Direct Debit (SDD).

About SDD for merchants

The main advantages of using SDD include convenience, accuracy, and improved cash flow.
After a debtor consents one time to a recurring SEPA Direct Debit transaction, the payments are automatically debited from their account on the agreed-upon date.
This reduces manual intervention for each transaction. For certain verticals (rental management, for example), an automated debit is common practice and makes sense for the debtor and the creditor.
With SDD, there is less chance that a payment is late, for the incorrect amount, or even sent to the wrong beneficiary. As a result, SDD also helps make reconciliation use cases easier.
Improved cash flow
Creditors can plan for payment arrival and amount. This mean they can better predict and control their revenue flow, which leads to more accurate financial planning.
Refer to the billing fees section for information about fees associated with merchant SEPA Direct Debit transactions.

Core and B2B SDD schemes

Swan offers two SDD schemes: Core and B2B. Your choice will depend on your business needs. You can choose to use one or both according to your use case.
SDD Core
Debtor account type
Individual and company
Refund requested by debtor
Up to 8 calendar weeks after due date and time (no questions asked)
Not possible
Returned by debtor's bank
Up to 5 business days for insufficient funds
Up to 3 business days for insufficient funds
Payment mandate consent from debtor bank
Not required
Refusal and rejection timeline
Up to the date and time of settlement execution
Up to the date and time of settlement execution
Creditor SDD cancellation
Up to the due date and time
Up to the due date and time
Creditor reversal
Up to 5 business days after due date and time
Up to 5 business days after due date and time
One-off and recurring
One-off and recurring

SEPA Creditor Identifier (SCI)

SEPA Creditor Identifiers are unique reference codes that identify each creditor participating in a SEPA Direct Debit scheme.
SCIs are unique to each merchant and help banks sort transactions by merchant to ensure those transactions are routed correctly.
SCIs include several elements, including:
  1. 1.
    ISO country code
  2. 2.
    Two-digit checksum
  3. 3.
    Creditor business activity code
  4. 4.
    National identification feature
For example, FR12ABC0123456789 is an SCI from France (FR) with the check number 12, and the business activity code ABC, ending with the national identification feature that can change country to country (here, 0123456789).

SCI options

Swan provides an SCI, and merchants can also choose to use their own.
Both meet all SCI requirements. It's important to note, however, that Swan's provided SCI always mentions Swan, which appears on a user's transaction history.
Merchants might prefer to use their own SCI for a more customized user experience. Users would see the merchant's name instead of Swan on their transaction history, reducing friction and the risk of transactions looking suspicious to users. The merchant's bank would also see the label Swan in disputes, so having the merchant name appear instead could also ease bank relations.
If a merchant is interested in using their own SCI but they don't have one, Swan can help. Send an email to [email protected] to start the process.

Rolling reserve

Rolling reserve is a policy Swan applies to merchant transactions to protect the merchant and Swan against various risk factors, primarily insufficient funds. The reserved amount acts as a safety net to cover potential loss for both Swan and the merchant .
Payment method
Rolling reserve
Default amount
Core SEPA Direct Debit
15% over 15 business days
B2B SEPA Direct Debit
100% over 3 business days

Payment mandates

A payment mandate is a written authorization from a debtor that allows a creditor to initiate a direct debit transaction from their account. Without a mandate, the creditor cannot legally debit the debtor’s account.
Payment mandates are mandatory for all SEPA Direct Debit transactions. One payment mandate can cover as many debit transactions as needed between the debtor and the merchant.
Partners are responsible for handling payment mandates. You can either include it in your Terms and Conditions or generate the mandate and have it signed using electronic signature. When the mandate is ready, declare it to Swan through our API.
After declaring the mandate, you can upload it to your Swan Dashboard as a PDF. This isn't mandatory but might be helpful if a debtor's bank requests a copy of the signed mandate.

Required information

In addition to a clear description of payment rights (detailed next in recommended content), SEPA Direct Debit payment mandates must include the following information; otherwise, the mandate is considered invalid.
Mandate title
Choose one:
  • Core SEPA Direct Debit Mandate
  • B2B SEPA Direct Debit Mandate
Mandate reference
Unique identifier for the mandate, visible on the debtor's bank statement
Payment type
Choose one:
  • Recurring
  • One-off
Creditor information
  • Name
  • Creditor account holder address
Debtor information
Choose one:
  • Debtor's account number
  • Debtor's IBAN

One-off mandates

Some mandates can only be used one time.
When the sequence value is OneOff (instead of Recurring), the received SEPA Direct Debit payment mandate is canceled automatically after the transaction is executed, regardless of the transaction status.

Settlement date and booked time

SEPA Direct Debit transactions are booked at 20:00 CET/CEST on the settlement date if no reject or cancellation has been issued or received.
Days are measured as business days. Time is expressed with the 24-hour clock.


Rejected SDD transactions

When an SDD transaction is rejected, the debtor bank is not debited.
An SDD transaction might be rejected for the following reasons (this list is not exhaustive):
  • Incorrect account number
  • Debtor canceled the payment mandate
  • Account is closed
  • Insufficient funds
  • Technical issue
  • Debtor requested refusal of the SDD before the date and time of the settlement execution
When an SDD transaction is rejected, regardless of the reason, the creditor receives a notification and can attempt a new SDD at a later date.

Returned SDD transactions

When an SDD transaction is returned, the debtor is debited the amount, but the payment is reversed and the funds return to the debtor's account.
An SDD transaction might be returned for the following reasons (this list is not exhaustive):
  • Debtor disputes the payment
  • Insufficient funds
  • Invalid payment mandate (for example, the mandate was not declared to the debtor bank)
When an SDD transaction is returned, regardless of the reason, the creditor is notified about the return. They can investigate the reason for return and take whatever action is necessary, which might be refunding the payment or disputing the return with the debtor's bank.
Returns and refunds are only possible with SDD Core and can be requested up to 8 calendar weeks after due date and time.