SEPA payment method – The complete guide for business owners

Today, the SEPA payment method facilitates over 43 billion transactions per year. No wonder – the system allows businesses, public authorities, and individuals to speed up and simplify their payment processes across a number of countries in Europe.

As a business owner, you’ve probably already heard of the term. However, you might still want to clarify the following questions:

  • What’s the SEPA payment method in detail?
  • What are its benefits?
  • How does the system work?
  • How long does a transfer take?
  • Are there any transfer charges?
  • How can you accept SEPA payments?

Let’s unpack all you need to know about the SEPA payment method!

What does the SEPA payment method stand for?

“SEPA” is the abbreviation for Single Euro Payments Area. This is a transaction system of the European Union that harmonizes the way electronic euro payments are transferred between bank accounts in participating countries and territories.

The SEPA payment system makes it possible for European businesses, individuals, and government agents to send and receive payments between two cross-border bank accounts in the eurozone with the same cost and convenience as making domestic bank transfers.

The SEPA payment method was introduced for credit transfers in 2008, followed by direct debits in 2009. The system was fully implemented by 2014 in the euro area. Further non-euro area countries joined in 2016. The SEPA payment system is approved and regulated by the European Payments Council.

SEPA countries

The SEPA payment method is currently available in 36 countries and territories: the 27 Member States of the European Union as well as the United Kingdom, Iceland, Norway, Liechtenstein, Switzerland, Monaco, San Marino, Andorra, and the Vatican City State/Holy See.

The SEPA payment method is currently available in 36 countries and territories.

SEPA payment method – Goals and benefits

As you can already see, the main goal of SEPA is to make cross-border electronic payments as inexpensive, secure, quick, and simple as national payments.

The SEPA payment method allows consumers to rely on one payment account and card to make euro payments wherever they are in Europe. This gives them peace of mind when they’re traveling in Europe or making online purchases on websites based in other countries.

At the same time, companies that accept the SEPA payment method benefit from increased business opportunities within the European market. Additionally, they can save time and money, as they don’t have to deal with multiple payment card standards for euro payments.

Furthermore, as the system creates a single market for payment services, there’s an increased competition between payment and card service providers. This offers consumers and businesses a greater choice of highly competitive services.

All the above contribute to the efficiency and competitiveness of the European economy as a whole!

How does the SEPA payment method work?

Regarding the SEPA payment process flow, there are three types of SEPA bank transfers you should be aware of:

1. SEPA Credit Transfer

This type of SEPA payment method is mostly used for one-off transfers.

It uses the IBAN and occasionally the BIC numbers of both the sender’s and the recipient’s bank accounts to move money from one account to another. The SEPA transfer time is usually one business day.

Some examples for this type of SEPA payment method include the deposit of payroll into an employee’s account or one-time payments to relatives’ or friends’ bank accounts within the SEPA region.

2. SEPA Instant Credit Transfer

This type of SEPA payment method was established in 2017. As its name reveals, it’s all about speed.

Once the transfer is authorized, it usually takes less than 10 seconds for the funds to be transferred to the recipient’s bank account. The reason is that this type of SEPA payment method doesn’t involve any intermediaries in the process.

Furthermore, it’s also available 24/7, 365 days a year, so that payments won’t be delayed during the weekend or public holidays.

This provides a better customer experience besides increasing the revenue and improving the cash flow for merchants. A true win-win scenario!

There’s only one thing you need to take into account: to use this SEPA payment method, both the sender’s and the receiver’s banks need to be registered as SEPA Instant members.

SEPA Instant Credit Transfer.

3. SEPA Direct Debit Transfer

In contrast to the above two SEPA payment methods, the SEPA Direct Debit Transfer is usually used for recurring payments. This may include subscriptions, rent, electricity bills, or regular loan repayment installments.

Similar to the other two types of SEPA transfers, this SEPA payment method also requires the IBAN and occasionally the BIC number of both the sender’s and the recipient’s bank accounts.

However, the main difference is that it works as a “pull-based” method of payment. This means that here, the roles are reversed: the recipient of the funds is the one who needs to request the money transfer from the sender. Therefore, it’s similar to the ACH payment in the U.S.

Why is this type of SEPA payment method especially advantageous for membership or subscription businesses?

SEPA Direct Debit has three important advantages for companies collecting regular payments, whether it’s membership sites or SaaS businesses:

  1. Using this type of SEPA payment method allows merchants to ensure that customers will pay their bills on time every month.
  2. Using SEPA Direct Debit may increase retention by eliminating failed payments due to card expiry or cancellation, making your dunning process less complex. As it offers a convenient “set it and forget it” payment method, it may also increase customer loyalty.
  3. Last but not least, it reduces the admin time involved in chasing card details.

What does the process look like?

To initiate a bank debit, your customer needs to provide their bank account details during checkout and gives you permission to debit the account by agreeing to a mandate. This is a contract that allows you to pull money from your customer’s account on a recurring basis. As the next step, you’ll have to send the SEPA Direct Debit order to the bank. As required by the SEPA Direct Debit rulebook, each time you debit your buyer’s account, you’ll have to notify them in advance.

Not that complex so far, right?

Though, to make things a bit more complicated, you should be aware of the fact that there are two types of SEPA Direct Debit Transfers:

  • The SEPA Core Direct Debit Transfer is available to individuals. All banks participating in the SEPA scheme have to offer this type of SEPA payment method. Regarding the transfer time, it takes a minimum of two business days for the money to reach the recipient’s bank account.
  • The SEPA B2B Direct Debit Transfer is only available between businesses and takes a minimum of three business days. Banks participating in the SEPA scheme may choose to offer it to their customers; however, it’s not mandatory.

Does the SEPA payment method involve any transfer charges?

Getting familiar with the aim and benefits of the SEPA payment method, you’ve probably already guessed the answer right: SEPA transfers generally cost the same amount as local bank transfers. This means they’re usually free.

The bad news is that some banks may charge you an extra fee for SEPA transfers if they also charge an extra fee for local bank transfers within the same country.

Who bears the charge in this case?

It depends on your bank. It could be paid by the recipient in full, or it could be shared between the recipient and the sender. Additionally, if the transaction involves multiple currencies, there may be an extra currency conversion fee to pay.

How to accept SEPA payments?

To accept SEPA payments, merchants need to look at what options they have at their payment service providers.

Stripe, for instance, is an excellent payment processing platform to accept secure SEPA Direct Debit payments in minutes! If you’re already using the platform, you’ll know that Stripe not only helps businesses accept payments and send payouts globally, but it also helps companies beat fraud (Stripe Radar), send invoices (Stripe Invoicing), stay compliant with EU VAT rules (Stripe Tax), and much more!

You can enable the SEPA payment method right from the Dashboard. You can add it to any Stripe integration for unified monitoring, reporting, and payouts. SEPA Direct Debit also works with custom-built payment forms. There’s no application, onboarding, or any additional paperwork to get started.

You can add the SEPA payment method to your Stripe integration in minutes.

Through Stripe Connect, platforms and marketplaces can also easily distribute SEPA Direct Debit with no work required by merchants anywhere in the world.

Stripe’s built-in mandate collection makes it easy to get customer authorization, and the payment platform also automatically sends your customers an email each time you debit their accounts.

For more information on how to get started, make sure to take a look at Stripe Docs!


The SEPA payment method is a regulatory initiative for sending and accepting payments in euros within the territory of the European Economic Area by harmonizing financial schemes, standards, and procedures. The system provides SEPA members with an affordable, efficient, and quick electronic funds transfer option. Accordingly, adding SEPA Direct Debit to your payment service provider integration allows you to offer European customers a simple and safe way to pay directly from their bank accounts for one-time or recurring charges.