SDD direct debit in BtoB

Today, payment by credit card is the most popular means of payment in France. It is a simple, fast and secure way of paying for both national and international transactions. Most B-to-C payments are made by this means of payment. In 2020, almost 490 billion euros of expenditure in shops or on the Internet were paid for by the 72.7 million French credit card, i.e. around 60% of current consumer spending.

The use of credit card also represents a significant market share in B-to-B sales. Used as an alternative to bank transfers, cheques or account payments for small amounts, generally less than €5000, it is becoming increasingly secure, particularly thanks to 3D Secure 2.0.

However, payment in the B2B sector is often governed by cumbersome, repetitive and time-consuming processes. Business-to-business payments are more important and the risk of non-payment is more measured, which is why companies are gradually turning to alternatives such as SDD (SEPA Direct Debit).

This method offered by payment providers is based on the principle of direct debit. It enables payments to be collected in euros in the 34 countries of the SEPA (Single Euro Payments Area), whether it be the settlement of a single transaction, recurring payments, subscriptions, etc.

This means of payment establishes a set of rules and processes for all direct debits denominated in euro. There is therefore no distinction between national and cross-border direct debits in euro. The same standards, deadlines and processes apply to all countries in the SEPA zone, and unlike payment by credit card, SDD payments have no expiry date and no purchase limit.

This type of payment method therefore offers several advantages:

• Improved cash flow: companies know the exact date of receipt of euro payments from SEPA countries
• Better control of collection: unlike bank transfers, which must be initiated by the debtor, direct debits are initiated by the creditor
• Lower costs: no more additional charges for euro payments from other SEPA countries
• Improved retention and conversion rates: unlike payment by bank card, there are no more problems with limits or expiry dates
• Easier access to new markets: SDD makes it cheaper and easier to collect euro payments across Europe

There are currently 342 million potential users of this payment method. After the bank card, the SDD has the largest potential audience. It generates around 36 billion euros in transfers each year.

There are several steps to setting up a SDD direct debit. First, the creditor must ensure that he has a SEPA Creditor Identifier (SCID), provided by his bank, in order to avoid any rejection. Next, the creditor must collect the debtor’s banking information (IBAN and BIC), and then draw up and have the mandates signed. Before each direct debit, the creditor is obliged to inform the debtors (pre-notification). Finally, the creditor must keep all direct debit authorisations and send all SEPA direct debit orders to its bank.

As a payment service provider, CentralPay offers comprehensive solutions for automating complex collection processes and enables e-retailers, platforms and marketplaces to optimise their transactions on a local and international scale.