SEPA B2B
Introduction
SEPA Business-to-Business (SEPA B2B) is a direct debit scheme specifically designed for transactions between businesses. Unlike SEPA Core, which is used for consumer payments, SEPA B2B provides merchants with greater security and payment certainty by removing the possibility of chargebacks once a payment has been executed. This scheme requires debtor banks to verify each mandate before allowing the first direct debit, ensuring that only explicitly authorized transactions proceed. SEPA B2B is particularly beneficial for businesses that require non-reversible payments, making it ideal for industries handling high-value transactions, long-term service agreements, or contractual obligations where payment finality is critical.
A key difference between SEPA B2B and SEPA Core is how chargebacks and mandate verification are handled. SEPA Core provides consumers with significant protection, allowing them to request a chargeback within 8 weeks of a payment being processed or up to 13 months in cases of unauthorized transactions. In contrast, SEPA B2B does not allow chargebacks once the payment is completed, significantly reducing the risk of chargebacks for merchants. Additionally, SEPA B2B mandates must be verified and explicitly approved by the debtor's bank before the first debit is initiated. If a mandate is not correctly approved, the payment will be rejected, making prior validation an essential step in the process.
SEPA B2B is supported by a majority of European banks, but not all banks participate in the scheme. Merchants must confirm that their business customers' banks accept SEPA B2B payments before initiating transactions. Failure to do so may result in rejected payments, causing delays in the settlement process.
Merchants should implement a validation mechanism within their onboarding process to check the debtor's bank compatibility with SEPA B2B.
If you are unsure which SEPA scheme to implement, contact your assigned Product Solution Specialist (PSS) for guidance.
Mandate Handling
SmartPay supports two configurations for handling SEPA B2B mandates, distinguished primarily by the party acting as the creditor, either J.P. Morgan Mobility Payments Solutions S.A. or the merchant. Both models are available both via our API-first integration and our Checkout Web SDK, and require the merchant to maintain compliance with SEPA regulations.
JPM MPS as Creditor
In this configuration, SmartPay provides access to JPM MPS's pre-configured creditor ID (JPMCOID) and manages mandate ID generation and validation in the background. Merchants integrating through this model do not need to register a creditor ID themselves. Instead, they initiate payments using the provided mandate reference and SmartPay handles validation with the debtor's bank.
Merchants are still required to collect a physically signed mandate from the customer and ensure secure storage of the document, for audit purposes. The signature must be obtained before initiating any payment. Mandate validation is performed automatically through SmartPay infrastructure before any direct debit is triggered.
To initiate a SEPA B2B mandate, merchants must follow the SEPA API-only integration.
This model simplifies SEPA B2B adoption, especially for merchants new to direct debit or those who prefer to offload creditor registration and mandate validation. It also allows merchants to use SmartPay's split payments functionality to route collected funds to multiple recipients.
To reiterate the benefits:
- No need to apply for or manage your own SEPA creditor ID
- Mandate reference is issued and tracked via SmartPay
- JPM MPS handles mandate submission to the debtor's bank for validation
- Compatible with split settlements flow
Merchant as Creditor
For merchants who already operate with SEPA creditor ID and established mandate management processes, SmartPay supports a flexible external mandate model. In this configuration, the merchant acts as the legal creditor and takes full responsibility for the mandate lifecycle (creation, signature collection, validation, storage, usage, updates, and cancellation or expiry).
The merchant is responsible for:
- Generating a unique mandate reference
- Collecting a physically signed mandate from the customer
- Ensuring the mandate is verified and approved by the debtor's bank before payment initiation
- Archiving and maintaining mandate documentation in line with SEPA requirements
Before initiating SEPA direct debits, merchants using their own creditor ID should register their details with the Product Solution Specialist (PSS) team to enable whitelisting.
This whitelisting step is essential to enable correct routing and validation of payments. The following information must be provided:
- Creditor name: the legal name of the creditor that will be displayed on the SEPA mandate form to be signed by the customer
- Creditor address: complete address including street name, house number, postal code, city and country associated with the creditor and referenced during mandate verification process
- Creditor ID: the unique SEPA Creditor Identifier issued by the national SEPA authority
- Creditor bank details: the full IBAN of the creditor's bank account that will be used to collect SEPA payments
This model is intended for merchants who require full control of the mandate processing or are migrating an existing SEPA B2B setup into SmartPay.
Transaction Types
Merchants integrating SEPA B2B payments through SmartPay can use both the Web SDK and API to initiate mandate collection and payment setup. All SEPA B2B mandates must be validated by the customer's bank before the first collection. This validation is triggered during the mandate setup phase, either as part of the checkout experience or through backend integration. Once the mandate is approved, it is linked to a stored payment option of type SEPADDB2B, containing the mandate reference and debtor bank details.
To ensure payment execution, SmartPay requires a valid and pre-approved mandate reference at the time of each transaction. B2B payments are not eligible for consumer chargeback, providing merchants with greater security and certainty. However, not all banks across SEPA support B2B mandates, so merchants must verify support during customer onboarding.
SmartPay supports both Customer-Initiated Transactions (CIT) as well as Merchant-Initiated Transactions (MIT) for SEPA B2B, but the operation requirements differ.
CIT
CIT payments occur when the end customer actively confirms a transaction, typically during checkout. The Web SDK collects the customer's IBAN and mandate signature in real time, after which SmartPay initiates the mandate validation with the debtor's bank. Once validated, the CIT transaction is submitted immediately.
For more information, please refer to our Integration Journey.
MIT
MIT payments are executed without the customer's involvement at the time of the transaction, relying on a previously signed and validated mandate. Once the SEPA B2B mandate is stored and verified, merchants can trigger recurring MIT payments, such as subscriptions, using SmartPay's APIs. The mandate reference and creditor ID must be correctly linked to the stored payment option.
Please refer to details on the standard MIT flow here.
SEPA Mandate Distinctions
SEPA DD payments require a signed mandate for each payment flow.
For CIT, a one-time mandate must be signed before the transaction can proceed. This mandate is valid only for that specific transaction and expires immediately afterward. For MIT, a separate recurring mandate must be signed. This mandate grants the merchant permission to collect payments at regular intervals or upon specific triggers defined in the agreement. It is important to note that these mandates are not interchangeable, a CIT mandate cannot be reused for MIT flows and vice versa. Both must be created, stored and managed independently.