What do I need to do to accept SEPA Direct Debit and reach the largest number of European buyers?

HTML0 The content was updated since the time it was first published with the most current information on SEPA Direct debit transactions, as of April 2023.

If you're selling software globally You're aware of how challenging managing cross-border transactions could be. It's not just about showing the correct currencies for each area to ensuring that you support your clients preferring payments that are accepted in the global market, it can be a source of difficulties.

The majority of consumers in the European Union and surrounding countries choose to pay with SEPA Direct Debit. SEPA Direct Debit not only makes it easier to make payment in multi currencies but it also lowers the risk of unsuccessful payments.

In this article we'll cover the basic concepts of SEPA Direct Debit and discuss why it's so important to take it into consideration during the checkout process for businesses operating within Europe.
    Table of Contents

1. HTML0 What is Direct Debit SEPA?
2. What is SEPA Direct Debit work?
3. SEPA Advantages & Disadvantages
4. 's SEPA Experience

Are you already a seller and wish to set up SEPA Direct Debit for your business? Create a support request from inside the platform or via our support page.

What does it mean? SEPA Direct Debit?

SEPA Direct Debit is a wire transfer that allows retailers to accept payments directly from the accounts of countries and associated territories in the SEPA Single European Payments Area (SEPA).

SEPA is extremely similar to ACH Debit (US) as well as EFT (Canada) but with the exception of there are a few distinct differences:

Why is it vital to adopt SEPA?

Today, more than 529 million individuals are using SEPA to pay more than the more than 146 billion electronic payments per year in the 36 member countries. The SEPA system makes up 30% of all internet-based shopping in Europe and makes SEPA an essential payment method that you can use if selling to Europe. European market.

European-Economic Area (EEA) SEPA Countries

• Austria
• Belgium
• Bulgaria
• Croatia
• Cyprus
• Czech Republic
• Denmark
• Estonia
• Finland
• France
• Germany
• Hungary
• Iceland
• Ireland
• Italy
• Latvia
• Liechtenstein
• Lithuania
• Luxembourg
• Malta
• Netherlands
• Norway
• Portugal
• Romania
• Slovakia
• Slovenia
• Spain
• Sweden

 SEPA countries not EEA in addition to Territories

• Andorra
• Monaco
• San Marino
• Switzerland
• United Kingdom
• Vatican City State
• Saint-Pierre-et-Miquelon
• Guernsey
• Jersey
• Isle of Man

Additionally, any European who has accounts with banks will be able to pay with SEPA. When you allow this one payment option at the time of purchase, you will be able to connect with more than 500 million potential buyers from 36 different countries.

What is SEPA Direct Debit function?

SEPA transfers operate similarly to transactions for domestic transfers however there are some subtle variations that occur at the back of the scene. This is how they function from the viewpoint of a business:

1. Mandate
2. Pre-notification
3. Demand for payment
4. Post-submission

1. Mandate

Before you can collect payment via SEPA Direct Debit your client must complete the mandate that authorizes the merchant to accept payments. Mandates are the legal contract that is signed by the buyer in order to allow the seller to collect any future payments they make by using their account in the Euro amount.

Mandates must include certain mandatory information.

Important Items for the Mandate

• Pay amount
• SEPA Mandate ID
• SEPA Mandate Date Mandate
• The name of the business that serves as a reference for retailers
• Merchant's Creditor Identification
• Address of the Merchant's complete address
• Creditor Information
• Payment method
• International Bank Account Number (IBAN)
• Bank Identifier Code (BIC)
• Date Signed
• Signature

Here's a sample of's SEPA Mandate:

Step 2: Pre-Notification

In accordance with SEPA regulations, you're required to send your customers a pre-notification to let them that they are eligible for an individual installment or periodic monthly subscription that will be paid off their account in the bank. This notification can be delivered via text messages, email and/or phone calls, as well as invoices, or by notes.

Compliant pre-notifications must include these things:

1. The proper notice period (typically 14 calendar days)
2. Date of due, the mandate number, creditor's ID
3. Contact details for the seller

3. Payment Request

After the pre-notification is delivered After the pre-notification is delivered, you can start payment by submitting the mandate-related data to the bank of the seller. It does this on its own for merchants. The bank will then send the request through the settlement and clearing system who will send the request to the customer's banking institution to settle.

Step 4: Post-Submission

When you've made the payment, it could be a couple of days before you can tell if the SEPA payment was successful or unsuccessful. That's why we recommend waiting minimum of 48 hours to finalize the purchase.

SEPA Benefits and Negatives

Benefits

SEPA Direct Debit has 3 significant advantages for businesses that take on recurring payment:

• Control allows merchants to make sure that customers pay their bills in time each month.
• Rates of retention: Eliminates failed payments because of card expiry or cancellation. Additionally, it improves customer loyalty by offering an easy set-and-forget method of payment.
• Reducing administration time It reduces admin time needed to collect payment.

SEPA Direct Debit is also great for B2B invoicing:

• Enhances cash flow Payments are processed accurately and punctually in a fast method.
• Collecting variable amounts: Using a single advance contract, sellers will have the ability to claim a new amount instead of giving banks fresh instruction each when a modification is required.
• The admin process is streamlined: Payments can be automatized in a scheduled.

Other advantages SEPA is good for:

• Markets with less usage of credit cards: In Germany and the Netherlands the percentage of use for credit cards isn't more than 50 percent. SEPA Direct Debit (Direct Debit) is the most popular way to pay for purchases in these two countries.

Negatives

SEPA isn't the ideal option to:

• transactions that require immediate clearing SEPA Direct Debit payments cannot be instant even with the B2B scheme, which is more effective.
• Transactions which are most likely to be charged back: This is because the SEPA Core Direct Debit no-questions-asked reimbursement policy that allows chargebacks (equivalent to refunds under the ACH scheme) simple in the first eight weeks from the time of the payment.

"'s SEPA Experience

Our system automatically displays an order at the point of checkout. It handles all necessary steps to processing the purchase of your purchaser, therefore there is no need to do anything except enable SEPA for payment method in the settings of your account.

It's what appears to be from the perspective of your customer:

1. The client selects SEPA Direct Debit, and is then required to enter the name of their bank as well as their IBAN number or bank code for logging into their account at the bank.
2. The customer agrees to terms of the SEPA Direct Debit Mandate Terms and confirms their bank information to submit the order.
3. When the purchase has been made after submitting the purchase to the seller, they are taken to a confirmation screen that affirms that the transaction has been completed.
4. Payments typically take at least two days to be processed.

Article was first seen on here