SEPA Direct Debit



SEPA Direct Debit is currently in limited release and is only available to pilot merchants. If you want to participate in the pilot, please contact us.

The Single Euro Payments Area (SEPA) is a payment-integration initiative of the European Union for simplification of bank transfers denominated in euro between member countries. SEPA enables customers to make cashless payments to any EUR bank account located in the area using a single bank account. To debit from SEPA bank accounts, the bank account holder must accept a mandate that gives debtors the authorization to debit the account.

How it worksanchor

SEPA Direct Debit can be offered as a payment choice in your checkout flow. Customers choosing to pay with SEPA Direct Debit will be asked to provide an IBAN that PayPal will validate before redirecting them to a mandate page. The customer authorizes your business and PayPal to debit from their SEPA Account by agreeing to the mandate. PayPal stores and manages mandates on your behalf; funds can be debited once your customer has agreed to the mandate, and mandate acceptance can be specified to be one time or recurrent.

Checkout flowanchor

  1. Customer is presented with your checkout page and selects SEPA as their payment method
  2. Customer provides IBAN information that is validated by PayPal
  3. Customer gets redirected to the PayPal hosted mandate page
  4. Customer accepts mandate
  5. Customer is returned to your checkout page to complete the purchase

Mandate managementanchor

The mandate acceptance flow is used to display mandates, obtain customer authorization, and store accepted authorizations. The Mandate Management API allows you to view or revoke authorized mandates that have been collected in the acceptance flow. After a mandate is created, the Mandate Management API can be utilized in any customer servicing experiences you choose to provide.

Mandate Management API Key Features:

  • Provides a front end experience to view accepted mandates
  • Fetches mandate details, such as status and mandate approval time
  • Allows for revocation of an accepted mandate for future payments
  • Automatically revokes a stored mandate acceptance if it has no transaction activity in the last 36 months or fails routine risk checks


SEPA Direct Debit transactions usually take 2-3 business days to settle. The time frame and details of the settlement process vary depending on if your account is configured to use Instant or Delayed Settlement:

Merchant funds settled instantly after transaction.Merchant funds settled after amount has been debited from the customer bank account.
Some failed transactions are re-presentedRe-presentment is not available.

Contact your account manager to configure settlement settings.

If you opt for Instant Settlements, transactions that fail due to insufficient funds may be re-presented to the customers's bank account after a delay. Re-presented transactions provide a second opportunity to collect the funds, and are auto triggered at an optimal time.


Failed transactions, whether instant or delayed, will attract a returns fee. Re-presented transactions that fail as well will attract a second returns fee.

Disputes and returnsanchor

Your customer can dispute any transaction with their bank. Disputes raised within 8 weeks of the transactions will be automatically honored in alignment with SEPA guidelines. Customers can dispute a transactions only as unauthorized after 8 weeks but up to 13 months.

SEPA return codesanchor

SEPA Return Reason Code PDF


PayPal Direct Banking Platform's SEPA Direct Debit solution is supported for bank accounts in the following countries:

  • Austria
  • Belgium
  • Cyprus
  • Estonia
  • France
  • Germany
  • Greece
  • Ireland
  • Italy
  • Latvia
  • Luxembourg
  • Malta
  • Netherlands
  • Portugal
  • Slovakia
  • Slovenia
  • Spain

SEPA Regulatory Guidelinesanchor

  • SEPA regulations require you to communicate a debit notification to your customer on successful debit for both one-off and recurring transactions. This is to be shown on the purchase confirmation pages, and associated emails. Informing your customers may reduce returns.
  • Merchants must allow buyers to dispute a SEPA DD for up to 8 weeks from the date of transaction, on a 'no questions asked' basis, with disputes being 'automatically honored'.
  • SEPA regulations require you to provide means for mandate cancellation. Mandate Management APIs allow for both viewing and revocation of mandates.
  • You may opt to communicate mandate information to your customer at or after mandate authorization.

SEPA risksanchor

SEPA Direct Debit scheme does not guarantee funds as your customer or their bank can initiate disputes.

  • Any disputes raised by your customer with their bank within 8 weeks of the transactions will be automatically honored in alignment with SEPA guidelines.
  • All returns, including those for disputes and insufficient funds, may attract a return fee. The return fee is charged by your customer's bank and is passed on to you. Some banks may refuse to honour electronic mandates, and return MD01.
  • If you have opted for instant settlement, settled fund may be debited from your account in case the customer is found not to have sufficient funds. In this case, settled funds will be debited after 1-2 days after the transaction.
  • Instant settled transaction may eventually fail to settle and may have two associated return fees. The first return fee will be for the initial debit attempt. If this fails due to customer having insufficient funds, the re-presentment is triggered. If the re-presentment fails as well, a second returns fee may be charged.
  • The SEPA Direct Debit scheme allows for returns to be initiated on any transaction, including those that you may have previously refunded. The scheme does not recognise refunds as being associated with original transaction, and does permits disputes on the original transaction.

Recurring transactions and Vault supportanchor

Vaulting payment methods and creating recurring transactions is supported with SEPA Direct Debit. See our vaulting docs for full instructions.

Integration stepsanchor

  1. Configure prerequisites
  2. Integrate your client
  3. Integrate your server

Next Page: Configuration