Learn about Single Euro Payments Area (SEPA) Direct Debit, a common payment method in the European Union.

The Single Euro Payments Area (SEPA) is an initiative of the European Union to simplify payments within and across member countries. They established and enforced banking standards to allow for the direct debiting of every EUR-denominated bank account within the SEPA region.

In order to debit an account, businesses must collect their customer’s name and bank account number in IBAN format. During the payment flow, customers must accept a mandate that gives the business an authorization to debit the account. Stripe is able to generate this mandate for businesses to present to their customers.

SEPA Direct Debit is a reusable, delayed notification payment method. This means that it can take up to 14 business days to receive notification on the success or failure of a payment after you initiate a debit from the customer’s account, though the average is five business days.

Verification Requirements

Using SEPA Direct Debit requires you to complete additional identity verification steps. You are prompted to complete these steps from the payment method settings in your account. If you require further assistance, please contact support.

Payment flow

Debit notification emails

The SEPA Direct Debit rulebook requires that you notify your customer each time you debit their account. For this case by default, your platform partners Stripe automatically sends the customer an email.

Creditor Identifiers (Creditor ID)

A SEPA Creditor Identifier (Creditor ID) is an ID associated with each SEPA Direct Debit payment that identifies the company requesting the payment. While companies may have multiple creditor identifiers, each creditor identifier is unique and allows your customers to easily identify the debits on their account.

By default your account is configured to use a Stripe Creditor ID when collecting SEPA Direct Debit Payments. Stripe Payments will appear on bank statements alongside your configurable statement descriptor. It’s recommended to use a recognizable statement descriptor to ensure customers recognize payments and to reduce the risk of disputes.

If you’re based in the EU, Stripe recommends that you use your own Creditor ID to both reduce dispute rates and improve your customer experience. You can configure your own Creditor ID in your account. When using your own Creditor ID your name will appear on statements instead of Stripe’s and you can use the Stripe statement descriptor for per-payment customization.

Note: After you’ve collected live SEPA Direct Debit payments on your account, you can’t change your Creditor ID in your account. If you need help with this issue, contact support for information about migrating to a new Creditor ID.

Disputed payments

SEPA Direct Debit provides a dispute process for customers to dispute payments.

Customers can dispute a payment through their bank on a “no questions asked” basis up to eight weeks after their account is debited. Any disputes within this period are automatically honored.

After eight weeks and up to 13 months, a customer can only dispute a payment with their bank if the debit is considered unauthorized. If this occurs, Stripe automatically provides the bank with the mandate that the customer approved. This does not guarantee cancellation of the dispute; the bank can still decide that the debit was unauthorized and the customer is entitled to a refund.

A dispute can also occur if the bank is unable to debit the customer’s account because of an issue (for example, the account is frozen or has insufficient funds), but has already provided the funds to make the charge successful. If this occurs, the bank reclaims the funds in the form of a dispute.

The dispute fee varies based on your account’s default settlement currency:

Unlike credit card disputes, SEPA Direct Debit disputes are final and there is no process for appeal. If a customer successfully disputes a payment, you must contact them if you want to resolve the situation. If you’re able to come to an arrangement and your customer is willing to return the funds to you, they must make a new payment.

In general, each dispute includes the reason for its creation, but this varies from country to country. For example, disputed payments in Germany do not provide additional information for privacy reasons.

If a payment is disputed, and that payment is associated with a multi-use mandate, that mandate could be deactivated. Make sure to check the status of such mandates after a dispute. You have to recollect mandate acceptance from the customers if previous mandate is deactivated.

Payouts

SEPA Direct Debit payments are subject to a 5 business day payout timing if your current payout timing is less than 5 business days or 7 calendar days. When you reach 35,000 USD of SEPA Direct Debit processing volume, payout timing for SEPA Direct Debit payments returns to normal.

Refunds

Customers can dispute a payment with their bank even after it has been refunded, resulting in two credits for the same payment. To prevent fraud, refunds may be disabled upon first refund attempt until your account has been reviewed. The review can take up to 2 business days. If you need assistance processing a refund please contact support.

For accounts with refunds enabled, it is recommended to only issue refunds on SEPA Direct Debit payments only when:

• It is a trusted and verified customer
• You have confirmed with the customer that you’re refunding the payment
• 7 business days have passed since you initiated the payment

Refunds for payments made with SEPA Direct Debit must be submitted within 180 days from the date of the original payment. Refunds require additional time to process (typically three to four business days). If you accidentally debit your customer, please contact them immediately to avoid a payment dispute.

SEPA does not explicitly label refunds when the funds are deposited back to a customer’s bank account. Instead, refunds are processed as a credit and include a visible reference to the original payment’s statement descriptor.

When issuing a refund, you should inform your customer immediately that the refund can take up to five business days to arrive in their bank account.