Every payment method has its own advantages and drawbacks, so ecommerce businesses should consider their options carefully before choosing one for their online stores.

This article explains what the Single Euro Payments Area (SEPA) Direct Debit payment method is, and what its pros and cons are for businesses and customers in Germany. It also outlines how to integrate direct debit payments into an online store.

What’s in this article?

• What is the SEPA Direct Debit payment method?
  
• Is SEPA Direct Debit suitable for online stores?
  
• Pros and cons of SEPA Direct Debit for online stores
  
• How can online stores implement SEPA Direct Debit?
  

What is the SEPA Direct Debit payment method?

Direct debit allows a payee to collect a specific amount from a customer’s account—the amount charged is then transferred to the retailer as credit. The prerequisite for direct debit is the one-time consent that the customer grants as a direct debit mandate.

Originally, direct debit was only possible within the account holder’s country. This changed with the introduction of SEPA Direct Debit, sometimes called SDD. As of April 2025, SEPA includes 36 countries: the 30 countries that make up the European Economic Area (EEA)—i.e., 27 EU member countries, plus Norway, Liechtenstein, and Iceland—as well as the United Kingdom (UK), Switzerland, San Marino, Monaco, Andorra, and Vatican City. This payment method allows businesses and private individuals to make fast and secure payments in euros across national borders.

There are two types of SEPA Direct Debit payments—SEPA Core Direct Debit and SEPA B2B Direct Debit. The former is used for business-to-consumer (B2C) transactions, and the latter for business-to-business (B2B) transactions. Another key difference is that there is no right of objection with SEPA B2B Direct Debit, meaning that an authorized payment cannot be reversed.

Is SEPA Direct Debit suitable for online stores?

SEPA Direct Debit is a perfectly suitable payment option for online stores. In ecommerce, what matters most is a smooth payment flow, which direct debit guarantees. In addition to the many benefits listed below, the popularity of direct debit is a key reason to implement it—customers value it highly, especially in Germany. According to a 2024 report, a little under 17% of Germany’s ecommerce purchases were paid for with direct debit in 2023, making it the third most popular payment method among online retail customers in the country.

Pros and cons of SEPA Direct Debit for online stores

As a payment option, direct debit has pros and cons for both businesses and customers.

Pros for businesses

• Low operational effort
  The SEPA Direct Debit process offers online stores a high degree of automation. Collecting payments doesn’t require the manual creation of invoices or the monitoring of payments, and dunning is typically not necessary. Admin effort is significantly reduced for recurring payments, in particular for subscriptions and memberships.

• Predictable cash flows
  The ability to collect payments on a specific date creates reliability in terms of financial planning. Online retailers generally receive the money on time and benefit from predetermined cash flows.

• Reduced risk of non-payment
  Payment collection is initiated by the retailer, meaning that the risk of non-payment is lower than with processes such as payments on invoice. Chargebacks can occur in specific cases, for example if the funds on the account are insufficient, or if the customer cancels the payment. In these cases, payment collection can be initiated again.

• Security
  Every SEPA Direct Debit is connected to a valid mandate with a unique mandate reference. This offers transparency and legal guarantees, such as binding regulations on cancellations and chargeback periods. The risk of fraud is lower than with other payment methods, especially payments on invoice.

Pros for customers

• Convenience
  SEPA Direct Debit is a convenient payment method for online store customers. Once the mandate has been issued, the amount due is automatically charged to the specified account—no additional action is required. This streamlines the purchasing process and saves time, especially for repeat orders.

• No payment deadline
  With some payment methods, such as purchases on account, customers need to keep the payment deadline in mind. With SEPA Direct Debit, payments are processed automatically, on time, meaning that missed payments and late fees are generally not issues.

• Superior transparency and control
  Payments are automated, but customers remain in full control—each payment can be tracked through bank account statements and is clearly identified by the mandate reference. In addition, SEPA Direct Debit involves an eight-week right of objection that allows customers to reverse charges without giving a reason.

• Security
  The SEPA Direct Debit procedure is subject to clear legal requirements and is standardized throughout Europe, making it a secure payment method for online retailers and customers. The latter are protected through the mandate regulation and the possibility of chargebacks. In the event of unauthorized charges, refunds can be requested through the bank at any time.

Cons for retailers

• Customer mandate requirement
  Before a SEPA Direct Debit payment can be processed, online retailers need to obtain express consent from the customer in the form of a valid direct debit mandate. This must be documented properly and verifiable if necessary—meaning it requires extra operational efforts on the part of the online store.

• The operational challenge of chargebacks
  If a direct debit payment doesn’t go through—for example, because the funds in the customer’s account are insufficient or a technical issue has occurred—the retailer can incur costs. The payment will need to be initiated again or collected through a different method, and the potentially incurred return debit fee can’t always be passed on to the customer.

• No right of objection in the event of chargebacks
  Under SEPA regulations, a customer can reverse a direct debit payment up to eight weeks after the charge without giving a reason. Retailers cannot dispute these chargebacks directly—instead, a new payment request or direct contact with the customer is required.

• Dependence on external processes
  The collection of direct debit payments relies on the banks involved. Technical issues, delays at financial institutions, or public holidays can lead to delayed payments. Online retailers have no direct control over these factors, but must take them into account in their internal cashflow and process planning.

Cons for customers

• Sensitive bank details required
  To pay with SEPA Direct Debit, customers must provide their bank account details. Reputable online stores uphold high security standards, but there is always a risk that bank details can be misused—for example, due to security gaps, phishing, or inadequately-verified providers.

• Limited control over the timing of payments
  Unlike with payments on invoice, which allow customers to determine the payment date within a specified period, direct debit payments are made automatically on a predetermined date. This reduces flexibility and can lead to additional costs in the case of insufficiently-funded accounts.

• Possible wait times for refunds
  If an order is canceled or returned, the business must refund the charged amount. Depending on the online store and the bank’s processing times, it might take several days for the refund to be credited to the customer’s account.

• Risk of unintentional or unauthorized debits
  In some cases, money can be charged erroneously or without the customer’s consent. If the charge goes unnoticed, it might lead to unwanted financial burdens.

How can online stores implement SEPA Direct Debit?

Retailers can integrate direct debit into their businesses independently or through specialized payment service providers. In both cases, payment processing must be secure, efficient, and legally compliant.

Independent implementation

To implement SEPA Direct Debit autonomously, online retailers first need to register with SEPA. Next, they need to obtain the customer’s written consent in the form of a SEPA mandate. Once the mandate has been signed by both parties, the business needs to register the direct debit mandate with their bank. They will then receive a SEPA creditor identifier number, which is used to identify the business during transactions.

Online retailers also need to handle the technical implementation of direct debit in their systems, with a special emphasis on security. Using SEPA Direct Debit requires compliance with legal guidelines such as the General Data Protection Regulation (GDPR), under which retailers must store and process all customer data securely, among other things.

Implementation with support from a payment service provider

Online retailers can also implement SEPA Direct Debit with the support of a specialized payment service provider such as Stripe. Stripe makes the integration process easy, as it takes on all technical and admin tasks. With this solution, retailers don’t need to register with SEPA, manage mandates, or worry about the details of payment processing.

Stripe offers a user-friendly Application Programming Interface (API) that enables the quick integration of direct debit to online stores. Stripe also guarantees that all legal and security requirements are met. Further, Stripe Payments allows businesses to offer their customers over 100 different payment options.