SEPA Direct Debit

SEPA Direct Debit lets a merchant pull euros from a customer's bank account anywhere in the Single Euro Payments Area. The customer first signs a mandate that authorizes the debits. Its low fees make it a common choice for subscriptions in Europe.

How SEPA Direct Debit works

The customer signs a mandate that lets the merchant debit their IBAN. The merchant then collects payments under that mandate. Funds take a few business days to move through the SEPA network, so settlement is slower than for cards.

Customers have strong refund rights. They can ask for a refund for any reason up to 8 weeks after a debit. If there was no valid mandate, they have up to 13 months. Keep mandate records and use clear billing descriptors.

Fees

SEPA Direct Debit costs less than cards on large payments. Stripe charges a percentage plus a fixed fee per debit, with a cap per transaction. The exact rate depends on the country of your Stripe account, so check Stripe's pricing page for yours.

Like ACH, the cap makes it cheapest on large invoices, where a card processing fee keeps growing with the amount.

Where SEPA fits

• Subscriptions for eurozone customers who would rather pay from a bank account.
• High-value invoices, where the fee cap keeps costs flat.
• Debits can fail or be refunded weeks later, so plan for failed collections and involuntary churn, as with ACH.