SDD works in the same manner as other Clearing Systems, with the exception that transaction in this Payment System is initiated by the Receiver. It allows making recurring transactions easier to execute as it allows for parties to have cross-border access. SEPA Direct Debit is based on the Clearing Systems of EBA.
SDD Core scheme is mandatory for any Financial Institution which intends to offer the euro direct debits for customers. Whereas Financial Institutions may choose to either join SDD B2B or not. Under the SDD B2B scheme, the Originator cannot be a private individual and must be a company. These systems have not only a different scope of operation but as well as different rules which must be adhered to. At the centre of this Payment System lies the notion that the Financial Institutions employing the scheme will be responsible for any incorrectly executed transaction and never the Customer which is using the system. By placing responsibility in such way, this system ensures the security of Originator’s funds.