How to collect international direct debit payments from SEPA countries

The Single Euro Payments Area (SEPA) refers to the 36 member states that reached an accord in 1999 to improve the speed and efficiency of cross-border payments.

There are several SEPA payment schemes, with the only requisites being that the payments being made are from countries that are part of the agreement and that the payments are made in the euro currency. Today we’ll be focusing specifically on SEPA direct debit.

What is SEPA direct debit?

SEPA direct debit is a system that allows merchants to collect payments in euros in a harmonious and secure fashion. When paying with direct debit from one SEPA country to another, it’s an incredibly straightforward process.

Indeed, the process is largely similar to any other direct debit transfer. The transaction is pull-based and bank-to-bank, meaning no third-party card networks need to be involved, and transaction fees are kept to a minimum.

However, a SEPA direct debit does differ from a generic direct debit in five ways:-

Currency – A SEPA transaction must be in euros.

Chargebacks – While a traditional direct debit chargeback can be claimed indefinitely, there is a limit of 13 months with a SEPA transaction.

Bank details – Whereas you need an account number and sort code to make a traditional direct debit collection, with a SEPA payment you instead require a customer’s bank identification code (BIC) and international bank account number (IBAN).

Customers – Businesses and consumers can be treated differently with SEPA payments. The SEPA core direct debit is available to consumers, whereas the SEPA B2B direct debit is available to businesses. The latter’s customers are not entitled to refunds unless the buyer proves they did not agree to a B2B mandate, and SEPA B2B direct debits offer a shorter timeline for payment submission.

Implementation – The submission process, payment timings and how mandates are stored all differ in SEPA direct debit transactions.

International direct debit payments from SEPA countries

While the UK remains a SEPA country even though it recently left the EU, Australia is not and never has been a SEPA country. So, how do Australians collect SEPA direct debits? Quite easily, as a matter of fact, as long as you’re using GoCardless as a payment processing platform.

GoCardless allows Australian businesses to accept euro-denominated SEPA direct debit payments from EU countries, which could prove convenient in the following use cases: 

Collecting regular payments

For businesses collecting membership or subscription payments, SEPA direct debit offers a greater level of control, ensuring bills are paid regularly and reliably. It also eliminates the potential for failed payments, as it draws directly from bank-to-bank and involves significantly less admin than many card-based payment methods.

Low card use countries

When collecting from markets such as Germany and the Netherlands, where credit card penetration is decidedly low, paying through SEPA direct debit is the preferred method of payment. Not accepting this payment method would seriously put off many customers in these markets.

B2B invoicing

SEPA is ideal for services where instant payment is not required such as marketing agencies or accountancy firms. It offers improved cash flow by putting the control into the hands of merchants and less manual effort when chasing payments. It also allows merchants to collect variable amounts easily using a single upfront authorisation.

Wholesalers

Using SEPA direct debit to collect payments from an international account or ongoing customers automates the collection process and allows account customers to simplify the way they pay. It also allows ongoing customers to spread costs.

We can help

GoCardless is an online direct debit specialist that manages the entire SEPA direct debit collection process on your behalf. Merchants can collect and manage their payments through our REST API, an online dashboard, or by connecting GoCardless to a partner integration.

Collecting payments from European customers with SEPA direct debit via GoCardless is quick and easy to set up, cheaper and more reliable than cards, it eliminates late payments and tedious financial admin, and is easy and secure for your customers too.

All you need is a free-to-set up GoCardless account. There's no need to complete any complicated legal or financial paperwork. You can be up and running in minutes because it's quick and easy to set up payments via the user-friendly merchant dashboard.