GLOBAL PAYMENTS KNOWLEDGEISO 20022 / SWIFT / SEPA / MT / MX
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SEPA Direct Debit — Core

A biller pulls a euro invoice from a customer under a signed mandate: the collection instruction flows from the creditor's side while the money moves the opposite way, from debtor to creditor.

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Contributor Shubham Mathure

STEP 1 / 8INTERNAL

Asha Traders confirms the mandate

Asha Traders (creditor / biller)

Before pulling any money, the biller checks it holds a valid mandate that Riya signed authorising these collections. The mandate — not the invoice — is what permits the pull; no mandate means no right to debit.

Checks

  • Mandate reference on file
  • Debtor's IBAN matches the mandate
  • Mandate not cancelled or expired

Step 1 of 8: Asha Traders confirms the mandate

  1. 01Processing
    Asha Traders confirms the mandateAsha Traders (creditor / biller)
  2. 02Message
    Asha Traders pre-notifies Riya of the collectionAsha Traders (creditor / biller) → Riya (debtor / customer)
  3. 03Message
    Asha Traders submits the collection to NordbankAsha Traders (creditor / biller) → Nordbank (creditor bank) · pain.008
  4. 04Message
    Nordbank submits the interbank collectionNordbank (creditor bank) → STEP2-T (CSM) · pacs.003
  5. 05Clearing obligation
    The CSM calculates obligationsSTEP2-T (CSM)
  6. 06Settlement
    Positions settle in central bank moneyBank Alfa (debtor bank) → Nordbank (creditor bank)
  7. 07Posting
    Bank Alfa debits RiyaBank Alfa (debtor bank)
  8. 08Posting
    Nordbank credits Asha TradersNordbank (creditor bank)
MESSAGECLEARING OBLIGATIONSETTLEMENTPOSTING
Full step-by-step text (works without JavaScript)
  1. 01Processing
    Asha Traders confirms the mandateAsha Traders (creditor / biller)

    Before pulling any money, the biller checks it holds a valid mandate that Riya signed authorising these collections. The mandate — not the invoice — is what permits the pull; no mandate means no right to debit.

  2. 02Message
    Asha Traders pre-notifies Riya of the collectionAsha Traders (creditor / biller) → Riya (debtor / customer)

    The creditor tells the debtor the amount and the due date in advance, so Riya can expect the debit and keep the account funded. This is a courtesy notice ahead of the pull, not the money movement itself.

  3. 03Message
    Asha Traders submits the collection to NordbankAsha Traders (creditor / biller) → Nordbank (creditor bank) · pain.008

    Here is the mirror image of a credit transfer: the instruction starts at the payee. Asha Traders sends a pain.008 collection request to its own bank, Nordbank, to go and pull the funds from Riya's account.

  4. 04Message
    Nordbank submits the interbank collectionNordbank (creditor bank) → STEP2-T (CSM) · pacs.003

    Nordbank converts the customer collection into an interbank pacs.003 and submits it to the clearing and settlement mechanism, which will route it toward the debtor's bank to be collected on the due date.

  5. 05Clearing obligation
    The CSM calculates obligationsSTEP2-T (CSM)

    On the due date the CSM validates the collection and includes it in a clearing cycle, calculating who owes whom. In a pull this obligation runs from the debtor's bank to the creditor's bank — the reverse of a credit transfer.

    Clearing produces obligations only. Nordbank does not have Asha Traders' money yet — that waits for settlement.

  6. 06Settlement
    Positions settle in central bank moneyBank Alfa (debtor bank) → Nordbank (creditor bank)

    The calculated positions settle across the banks' accounts at the central bank. Money moves from Bank Alfa (debtor side) to Nordbank (creditor side) — funds flowing debtor to creditor even though the instruction came from the creditor.

    • DR Bank Alfa settlement account — EUR 480.00
    • CR Nordbank settlement account — EUR 480.00
  7. 07Posting
    Bank Alfa debits RiyaBank Alfa (debtor bank)

    Bank Alfa books the debit against Riya's account for the collected amount. This is the customer-facing side of the pull: money leaves the debtor's account because the mandate authorised it.

    • DR Riya's current account at Bank Alfa — EUR 480.00
  8. 08Posting
    Nordbank credits Asha TradersNordbank (creditor bank)

    Nordbank credits the biller's account. The collection is complete end to end: debtor debited, banks settled, creditor credited — with the funds having travelled from Riya to Asha Traders.

    • CR Asha Traders' account at Nordbank — EUR 480.00

What this simplifies: One CSM, one settlement cycle, direct participants only, with pre-notification shown as a single step. Real SEPA Core direct debits batch many collections, honour fixed pre-notification lead times, and may run through indirect participants.

LEARN THE CONCEPTS BEHIND THIS FLOW

Sources for this flow2
  1. Scheme-specific rule2025 v1.1 (EPC016-06)

    2025 SEPA Direct Debit Core rulebook version 1.1 (EPC016-06) ↗ — European Payments Council

    Rules of the SEPA Direct Debit Core scheme: mandates, collection lifecycle, timelines, R-transactions, and refund rights. · Effective 2025-10-05 · Checked 2026-07-13

  2. Simplified educational illustration

    Payments Signal editorial teaching models — Payments Signal

    This site's own simplified teaching models. · Checked 2026-07-12

    What this simplifies: Single CSM and one clearing/settlement cycle; pre-notification timing, mandate registration, and multiple daily cycles are abstracted away.

    Used wherever diagrams, scenarios, figures, or example values are didactic constructions rather than sourced facts; every such use carries a simplifications disclosure. All people, companies, banks, and list entries in examples are fictional.