What is a bank direct debit?
A bank direct debit (or adeudo directo in Spain) is the authorisation you give a company to charge your bank account on a recurring basis. It is the system behind your utility bills, gym membership, school fees or rent.
TL;DR
- The customer signs a mandate authorising the company to collect.
- In Europe the official system is SEPA Direct Debit (SDD).
- Two variants: CORE (standard) and B2B (inter-company, no free-refund right).
- You have 8 weeks to refund any charge with no questions and 13 months for unauthorised charges.
- Collections are processed in XML pain.008.001.02 or equivalent national formats.
How it works
- The company (creditor) and the customer (debtor) sign a SEPA mandate.
- The company builds a batch with the month’s collections.
- It sends the file to its bank in SEPA XML format.
- The debtor’s bank receives the instruction and debits the amount on the agreed date.
- The customer sees the charge on their statement.
To create that batch from an Excel or CSV, use GenerateSEPA.
Customer benefits
- No need to remember payments: they happen automatically.
- Right of refund: if a charge looks wrong, you can refund it from your online banking in seconds (for 8 weeks).
- Free to receive on SEPA accounts.
Business benefits
- Predictable, automated collections.
- Cents per collection (vs. 1-2% card fees).
- Any amount allowed (no SEPA cap).
- Compatible with every European bank.
Risks to know
- Return messages (R-messages): if the debtor refunds or the bank rejects, you receive a return code (R01–R09). Read our R-messages guide to learn how to interpret them.
- Lost mandate: without it, you cannot justify a collection. Always keep it.
- Pre-notification: in B2B and when amounts change versus the mandate, you must warn the debtor in advance.
Direct debit vs. standing order
| Topic | Direct Debit (SDD) | Standing order |
|---|---|---|
| Initiator | The creditor | The debtor |
| Mandate | Required | Not required |
| Fixed amount | No (can vary) | Yes (set by debtor) |
| Free refund | Yes, within 8 weeks | No |
Conclusion
A bank direct debit is the most efficient way to collect and pay recurrently in Europe. For the customer it means convenience and protection; for the business it means predictable cash flow at minimal cost. To issue direct debits, automate the SEPA file creation with GenerateSEPA.
