SEPA Direct Debit

SEPA Direct Debit is the European equivalent of a bank direct debit: it lets a merchant pull euros straight from a customer's bank account across the Single Euro Payments Area. It runs on a signed mandate the customer gives the merchant, and it's a common low-fee choice for recurring subscriptions in Europe.

How SEPA Direct Debit works

The customer signs a mandate — authorization for the merchant to debit their IBAN. The merchant then submits collections against that mandate. Funds move through the SEPA network over a few business days, so settlement is slower than a card authorization.

A key feature of SEPA is the customer's refund right. Under the scheme rules, a customer can request a no-questions-asked refund up to 8 weeks after a debit, and up to 13 months for an unauthorized (no valid mandate) debit. That extended reversal window makes mandate records and clear billing descriptors important.

Fees

SEPA Direct Debit is inexpensive compared with cards. Stripe prices it at 0.8% + €0.30 per transaction, capped at €6.00, so like ACH in the US it shines on larger, recurring charges.

On a €1,500 charge, that's the €6.00 cap rather than a percentage-based card fee — a much smaller processing fee.

Where SEPA fits

• Eurozone subscriptions — customers who prefer paying from a bank account over a card.
• Lower fees at scale — the cap keeps costs flat on high-value invoices.
• Return handling — debits can be returned or refunded later, so failed collections and involuntary churn need retry logic just as ACH does.