SEPA Direct Debit (SDD) is a euro-area automatic account debit scheme managed by the European Payments Council, under which the customer submits a mandate (debit authorization) and the merchant then pulls payment on a recurring basis. Cyprus has belonged to SEPA since adopting the euro in 2008, so for an account with a CY-prefixed IBAN, this can be used for subscription-service billing in the same way telecom and insurance bills are auto-debited.

It is well suited to business models that bill customers residing in Cyprus every month, such as language and online education, SaaS, and memberships. It does not work for one-off visitors such as tourists, so only merchants with subscription revenue from residents should consider it.

When a customer submits their account details, such as a CY IBAN, along with a debit authorization (mandate) at checkout, the merchant's subsequent requests pull euros (EUR) from the customer's account at each billing cycle. Hecto Financial collects the debited funds, converts them, and settles the amount with the merchant in Korea in the contracted currency of USD, KRW, or JPY. A process for handling failed debits (returns) due to insufficient balance or a dispute should also be designed.

Accepting SDD recurring debits can be reviewed through Hecto Financial integration on the basis of a contract with a Korean business, but it presupposes a system for retaining and canceling mandates and handling refunds. Terms such as settlement cycle, fees, and currency options are negotiated based on the subscription model and transaction volume.

• Business registration country

  Confirm contract eligibility for businesses registered in Korea

• Sales channels

  The integration approach and priorities vary depending on your mix of online sales channels, such as your own site, open marketplaces, and mobile apps

• Product categories

  Check in advance whether your products fall under restricted categories per the SEPA Direct Debit operator's merchant policy

• EU regulatory compliance

  Confirm compliance with EU payment regulations such as PSD2 and SEPA (see official sources below)

SDD funds are debited in euros (EUR), collected and converted by Hecto Financial, and settled with the merchant in Korea in the contracted currency of USD, KRW, or JPY. A risk you must be aware of: under SEPA scheme rules, a consumer can demand a refund without giving a reason within 8 weeks of the debit date, and can dispute an unauthorized debit for up to 13 months. As a result, even settled revenue should be managed as unconfirmed for 8 weeks with possible clawback in mind for liquidity purposes, and this right under the bank scheme applies separately from the EU's 14-day right of withdrawal.

• Central Bank of CyprusOfficial information on Cyprus's payment systems and related regulations. If actual regulations differ from this page's content, the official source takes precedence.