What is SEPA Direct Debit?

Adam Rozsa

SEPA - the Single Euro Payments Area - covers many European countries, and allows for frictionless payments in euros across country borders. Payments can be made in several ways under SEPA - including SEPA direct debit schemes, which allow businesses in SEPA countries to collect recurring payments in euros from customers.

This guide covers SEPA consumer and business to business direct debit payment services, and how SEPA direct debit payments are used.

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📝 Table of contents

What is SEPA?

SEPA stands for Single Euro Payments Area. SEPA is an ongoing initiative spearheaded by the EU (European Union) to harmonize payments within the Eurozone and some other countries within Europe. The aim is to make it as fast, easy and cheap to make euro payments to other countries within SEPA as it is to make a domestic payment¹.

SEPA covers all EU countries, but also a few other European countries like the UK and Switzerland, which are not members of the EU. In total, 36 countries use SEPA at present. SEPA covers 3 different payment schemes:

  • SEPA Direct Debit(SDD or SEPA DD)²
  • SEPA Credit Transfer (SCT)
  • SEPA Cards Framework (SCF)

The different SEPA payment schemes cover varied payment types - and work is ongoing within SEPA to harmonize other payment types, like mobile and online transfers. This guide will focus on SEPA direct debit - you can learn more about other payment types on the SEPA pages of the European Payments Council website.

what is sepa direct debit

What is SEPA Direct Debit?

SEPA direct debit payments are similar to ACH debit payments in the US. Although there are a few important differences to the way ACH debits work at home, SEPA DD transfers are used to allow businesses to pull recurring payments from customer accounts. As with ACH debits, a customer will authorize a business using a SEPA direct debit mandate, and the company can then collect payments according to the agreed terms. Payment amounts can vary, making SEPA direct debits a useful payment instrument for bills that change month by month, like utility costs or a phone bill.

SEPA direct debit payments can be made by customers to companies - or for business to business transfers, under the 2 SEPA DD schemes:

  • SEPA Direct Debit Core (SEPA DD Core or SDD Core)
  • SEPA Direct Debit B2B (SDD B2B)

SEPA Direct Debit vs ACH Debit

Although SEPA DD payments roughly match ACH debit transfers in the US, they’re not exactly the same. Here are some key points to note:


  • Both are electronic payment methods which can be used for one off or recurring billing

  • Both are pull payment types, where the organization being paid is authorized to collect payments from the customer account

  • Both can be used for fixed or varied payment amounts

  • Both are managed through strict protocols to keep customer money safe and ensure efficient, cheap payments


  • SEPA DD payments can only be made in euros, even if the accounts involved in a transfer are held in other currencies

  • You’ll need to provide an IBAN and SWIFT/BIC code for SEPA payments, rather than an account and routing number as in the US

  • Customers can request a refund for a SEPA DD for up to 13 months after a payment is processed

  • SEPA direct debits can be made under both the core and B2B scheme, and the processing rules and protections do vary according to the payment type

what is sepa direct debit

What are the popular use cases for SEPA Direct Debit?

Not sure if SEPA direct debit is right for you? Here are some common examples of when SEPA DD payments can be helpful.

Case 1: Recurring bill payment - consumer to business

SEPA DD payments allow customers to set up repeat transfers which is easier for them, and ensures businesses are paid in full and on time. Good for consumer subscription services, mortgage and rent payments, or utility bills for example.

Case 2: Recurring bill payment - business to business

SEPA DD payments can also be used for B2B transfers - handy if you’re paying a regular retainer to a service provider, or if you have an ongoing payment arrangement to a supplier.

Case 3: Business invoice payments

Using a SEPA DD for business invoicing puts the recipient business in control of the payment date and amount. The payer only needs to complete a single authorization through a direct debit mandate, and the recipient can then trigger invoice payments when required.

Case 4: Payments in countries where credit card use is lower

SEPA direct debit payments are especially useful in countries where card payments are not as popular. No card provider is involved in a SEPA DD, instead the money simply passes from one bank account to another.

When not to use SEPA Direct Debit?

SEPA DD payments are not always the best option.

If you need a transfer to happen instantly, SEPA direct debits aren’t the right payment instrument to use. Similarly, as customers have very high levels of protection and can request a chargeback at any point in the 13 months after a payment is processed, SEPA DD transfers aren’t a good choice when customer returns are likely.

How to cancel a SEPA Direct Debit?

When you set up a SEPA direct debit, you’ll complete a mandate authorizing the company to collect payments. To end the arrangement you’ll need to cancel the mandate with your own bank. This can usually be done by logging into your online banking service.

what is sepa direct debit

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It's never been easier to set up Euro direct debits. With a Wise account, you can get EUR bank details and use direct debit to pay rent, bills, mortgages, or get your European pension.

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Frequently Asked Questions

What is the difference between SEPA Direct Debit and Standing Orders?

Both direct debit and standing order payments are processed electronically and can be used for recurring bills. However, they are different in the way they are set up, and in who is in control.

A SEPA direct debit is a pull payment type, in which the company being paid triggers the transfer. On the other hand, a standing order is controlled by the customer. Direct debit payments can be used for varied amounts and payment dates - standing orders can only be used for repeat transfers of the same value.

What is the difference between SEPA Direct Debit and SEPA Credit Transfer?

SEPA Direct Debits are set up to allow a company or organization to pull money from a customer account automatically and in accordance to an advance agreement.

SEPA Credit Transfers, on the other hand, are push payments. SEPA Credit Transfers are more commonly used for one off payments - although they can also include standing orders which may be recurring - and are set up by the customer pushing funds to another account.


1]European Payments Council - about SEPA
2]European Payments Council - SEPA direct debit

All sources checked on 21 October 2021

This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from Wise Payments Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date.

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