Single Euro Payments Area (SEPA) comes into effect on 1 February 2014 and will standardise Euro electronic payments across Europe.  The countries in the SEPA include all the existing members of the EU, Iceland, Lichtenstein, Monaco, Norway and Switzerland. The aim is to improve the efficiency of cross-border payments and applies to transactions in Euro.  The scheme allows a creditor to collect funds from a debtor’s account if a signed mandate has been agreed with both parties. As part of the SEPA EU initiative International Bank Account Numbers (IBAN) and Bank Identifier Code (BIC) will replace sort codes and account numbers. There are two schemes; the SEPA core direct debit scheme and the SEPA business to business (B2B) direct debit scheme

SEPA core direct debit scheme

1. Available to consumers and businesses
2. Right to request a refund of an authorised direct debit within 8 weeks of the transaction taking place.
3. 13 month period to request a refund of an unauthorised direct debit from the date of the debit from the payers account.

SEPA business to business (B2B) direct debit scheme

1. Available to businesses
2. No refund rights for authorised direct debits
3. 13 month period to request a refund of an unauthorised direct debit from the date of the debit from the payers account.

To date the main banks and credit unions in Ireland have only opted into the core direct debit scheme, but this may change later. The right to a ‘no questions asked’ refund may have significant impact on a business’ increasing risk and potential cash flow.  The payer has the right to a refund even if the benefit of goods or services has been received by the payer. It is important to note that this ‘no questions asked’ refund applies to direct debits only.  Businesses should review their systems to ensure that they have the systems in place to monitor the right to refund process.  It is also important to review the terms and conditions of business. More information is provided on http://www.readyforsepa.ie and from the financial institutions.