In Spain, direct debit is one of the most widely used payment methods. According to data from the Bank of Spain, direct debits accounted for over 12% of all electronic payments in the second half of 2024. During that period, the number of direct debits reached more than 1.1 billion, representing a year-on-year increase of 3.2%.

Given that 86% of customers say they often abandon a purchase if they cannot choose their preferred payment method, integrating direct debit into your business could help you strengthen sales numbers. In this article, we explain what direct debits are, how they work, the Spanish regulations that govern them, and the steps you must follow for your company to accept them.

What’s in this article?

• What is direct debit?
  
• How direct debit works in Spain
  
• Advantages and disadvantages of direct debit
  
• Businesses that can benefit from direct debit
  
• How Spanish regulations govern direct debit
  
• How to set up direct debit payments for your business
  
• How to handle direct debit refunds and cancellations
  
• FAQs about direct debit in Spain
  

What is direct debit?

Single Euro Payments Area (SEPA) Direct Debit—commonly known in Spain as domiciliación bancaria—is a payment method that allows an authorized company to automatically charge recurring payments to a customer’s bank account. As a prerequisite, the customer must authorize the charge via a SEPA mandate. From there, the amount is withdrawn directly from their bank account on each due date. This payment method is common with companies that follow a subscription business model and facilitate transactions within the SEPA. This includes almost all member states of the EU.

There are two types of direct debit: SEPA Core Direct Debit and SEPA B2B Direct Debit. Their main differences involve the type of payer and the refund period. SEPA Core is used to process customer payments and can be refunded within 8 weeks for authorized charges or 13 months for unauthorized charges. On the other hand, B2B direct debits are intended for transactions between businesses and cannot be refunded once authorized.

How direct debit works in Spain

Despite their differences, both types of direct debit have the same three stages:

Signature

The customer must sign a direct debit order or SEPA mandate. If they do not sign this mandate, the payment cannot be made by direct debit. The company is not authorized to withdraw the indicated amount from the customer’s bank account. To obtain a signature, the mandate must contain the following information:

• Unique SEPA mandate reference number
  
• Name, address, and customer’s International Bank Account Number (IBAN)
  
• Name, identifier, and beneficiary’s signature
  
• Date of signature
  
• Type of payment
  

Receipt

After receiving the direct debit authorization from the customer, the company draws up a bank receipt. This provides proof of the amount debited. The bank receipt should include detailed information about the product or service sold to the customer.

Charge

To ensure that the bank effectively debits the amount indicated on the bank receipt, many companies choose to issue a remittance. This document orders the bank to carry out a series of charges. Remittances must include the information contained in the bank receipt in an extensible markup language (XML) file that complies with the International Organization for Standardization (ISO) 20022 standard.

For recurring payments, remittances must be sent periodically to the bank. Upon the payment date indicated in the remittance, the bank withdraws the money from the customer’s account and deposits it into the company’s account.

Advantages and disadvantages of direct debit

Businesses with recurring revenue models can benefit from offering direct debit as a payment method. However, there are also some disadvantages they should consider:

Advantages of direct debit for customers

• Greater convenience
  Direct debit payments are processed automatically. This means customers don’t need to remember due dates, and companies can avoid service interruptions.
  
• Time savings
  Customers no longer have to handle payments manually. This can save time by eliminating a repetitive task that can be tedious.
  
• Price reduction
  Many companies reward customer loyalty with discounts on long-term subscriptions. For example, annual subscriptions usually amount to 10 or 11 monthly payments despite offering access to the product or service for a year.
  

Advantages of direct debit for companies

• More predictable revenue
  Direct debit can help companies know how much revenue they will have in each cycle, including payment dates. This can help maintain control over cash flow.
  
• Lower administrative burden
  By minimizing manual tasks, businesses increase productivity and reduce administrative costs.
  
• Fewer rejected payments
  SEPA Direct Debits are linked to bank accounts, which reduces the number of rejected payments compared to recurring card payments that can expire or reach the customer’s limit.
  
• Customer loyalty
  Direct debit can reinforce consumption habits and help reduce the number of customers that switch between different products. Strengthening continuity is especially important in sectors with high competition or low-cost subscriptions. This is also particularly important in Spain, which ranks second in Europe for decreasing customer loyalty.
  
• Greater security
  Direct debit provides greater security because initial agreements with customers are formalized through SEPA mandates. Similarly, this payment method is also more secure for customers. Requiring an initial signature can prevent unexpected charges.
  

Disadvantages of direct debit

• Limited availability for B2B payments
  While banks are required to accept SEPA Core Direct Debits, they are not required to accept SEPA B2B Direct Debits. Therefore, if a company receives many B2B payments, it should confirm that its bank accepts this payment method.
  
• Payment delays
  Unlike other payment methods—such as instant bank transfers—companies that use direct debit do not instantly receive the money when it is withdrawn from the customer’s bank account. After receiving the payment order, banks can take until the end of the next business day to credit the funds to the company’s bank account.
  
• Less payment oversight
  Automated payments can offer greater convenience. This means some customers do not check their SEPA Direct Debits often. Consequently, they might take longer to detect potential errors.
  

Businesses that can benefit from direct debit

Direct debit can be useful for companies that rely on subscription or recurring billing business models. In Spain, 77.5% of recurring payments are processed through direct debit. Below, we provide a list of the types of businesses that can benefit most from direct debit when collecting payments from their customers:

Subscription services

Stability is important for subscription businesses, and direct debit can help strengthen it. For example, RBA—one of the leading magazine publishers in Spain—allows customers to pay for subscriptions with direct debit. This payment method is also common in gyms and sports centers that have 5.4 million customers in Spain, according to the report The sports and fitness industry (La industria del deporte y el fitness).

Ecommerce stores that offer recurring purchases

Although card payments remain the most common payment option in ecommerce stores, more stores now offer direct debit as a payment method for recurring purchases. For example, this method is common in ecommerce stores that sell products customers periodically replenish, such as pet food or personal hygiene items.

Small and medium-sized enterprises (SMEs) and large enterprises in B2B environments

For B2B relationships—such as those that take place in B2B marketplaces—direct debit is often used to reduce a common problem: payment delays from companies to suppliers. In fact, nearly half of Spanish companies expect an increase in insolvencies among their B2B clients over the next year.

Financial services

Companies that offer financial services often use direct debit for loan and credit repayments. This can reduce defaults, which are especially common with consumer credit.

Nonprofits

Direct debit is beneficial for nonprofits because it promotes donation continuity and guarantees transaction transparency. According to the study Reality of Partners and Donors (Realidad del Socio y Donante), direct debit was the preferred payment method for financial contributors to nongovernmental organizations (NGOs) in 2023.

Real estate management

Rental payments are often made by direct debit. This helps to reduce delays in collecting rents managed by real estate agencies. In 2024, one in five Spanish households was rented. This means that millions of SEPA Direct Debits are processed monthly for rental payments.

Public institutions

Some government agencies that handle recurring charges of taxes and fees allow taxpayers to pay through direct debit. For example, the Spanish Tax Agency allows the processing of corporate income tax (IS) installment payments by filling out Form 202. This makes it easier for Spanish companies to pay this tax. In 2024, companies paid over €39 billion in IS payments.

Utility companies

Direct debit is a frequently used payment method for utilities in Spain. Payment amounts typically vary each month, depending on consumption. However, customers can pay through SEPA Direct Debit because it is compatible with both fixed and variable amounts. This feature makes direct debit an ideal payment method for companies with usage-based billing models.

How Spanish regulations govern direct debit

In Spain and Europe, several regulations govern direct debit. Here are the most important laws and obligations:

• Regulation (EU) 260/2012 on direct debits in euros
  This European regulation governs payments in euros within the SEPA. Among other obligations, Regulation (EU) 260/2012 requires signing a SEPA mandate and informing the customer of the amount and payment date. This must occur at least 14 calendar days in advance, unless a different period is explicitly agreed upon in the contract.
  
• Anti-fraud law
  The anti-fraud law includes requirements for programs used to automatically generate invoices and manage payments. Among other features, programs must register the charge at the same time that the direct debit payment is processed.
  
• Create and Grow (Crea y Crece) Law
  The Create and Grow Law requires businesses that establish commercial relationships with other companies or self-employed individuals to issue electronic invoices. Therefore, companies that receive recurring payments from other professionals via direct debit will have to issue and send invoices in electronic format after approval of the final regulations of the Create and Grow law, scheduled for the end of 2025.
  
• General Law for the Protection of Consumers and Users
  This law unifies and governs several customer rights, including the right of withdrawal. By exercising this right, customers can cancel their contracts. When this occurs, businesses must stop direct debits and process the corresponding refunds. If a business sells digital services or subscriptions, it can disable access to the service when the customer exercises this right.
  

How to set up direct debit payments for your business

To implement this payment method and comply with current regulations, follow the steps below:

Choose offerings

Define the services billed on a recurring basis or the products delivered periodically to your customers. Clearly indicate them in the direct debit description.

Set the billing frequency

Determine the period between charges to customers’ accounts. Regardless of the billing frequency, it’s important to inform customers in a transparent way to comply with regulations and reduce failed payments.

Set up direct debit as a payment method

Choose a payment processor that offers direct debit services and maintains close relationships with payment networks and banking partners, such as Stripe Payments. By integrating Payments into your technology stack, you can accept over 100 payment methods from customers in more than 195 countries. This includes SEPA Direct Debit, which you can activate in a single click from your Dashboard. In addition, Stripe ensures that your payment processes comply with local regulations. With Stripe Billing, you can automate recurring payments and avoid manual tasks, such as requesting payments from banks.

Automate billing

Lastly, set up recurring invoices and decide how they will be issued in each billing cycle. With traditional solutions, issuing invoices is separate from the payment process. However, solutions that integrate payments and billing—such as Stripe Billing—automate invoice management with Invopop. This is an electronic invoicing solution developed in Spain that complies with mandatory electronic invoicing requirements established by the Create and Grow Law and various European regulations. From the Stripe App Marketplace, you can access this and other solutions that can easily integrate with your payment platform.

How to handle direct debit refunds and cancellations

Setting up a recurring payment system—such as direct debit—can involve challenges common to all companies: refunds and payment cancellations. Among the most common reasons are insufficient funds, billing errors, and exercising the right of withdrawal. Regardless of the reason, it is important to know how to handle these situations:

Refunds of direct debits

Customers can request refunds from their banks. However, they can only do so in two cases:

• The customer did not authorize the direct debit: If the customer receives an unauthorized charge on their account, they have 13 months from the charge to request a refund from their bank.
  
• The beneficiary did not clearly indicate the amount of the charge: Despite authorizing the direct debit, the customer can request a refund within eight weeks. This can occur if the business does not clearly indicate the amount and the customer is charged a higher amount after several charges of similar amounts.
  

If the customer requests a refund, the bank has 10 business days to either repay the full amount charged or reject the request. If the bank rejects the request, it must explicitly state the reason and how to appeal the decision.

Cancellation of direct debits

To cancel a SEPA Core Direct Debit before the next payment is processed, the customer must provide the bank with a signed document stating the request date. However, the bank will only accept this request if it is submitted no later than one business day before the payment date. On the other hand, payments authorized through SEPA B2B Direct Debit cannot be refunded.

FAQs about direct debit in Spain

Do all Spanish banks accept direct debit?

All banks are required to accept direct debit, provided the payments are basic transactions (i.e., SEPA Core Direct Debits between a company and an individual). On the contrary, banks are not required to accept B2B direct debit. To check whether your bank accepts B2B direct debit—which is solely for use with companies or self-employed individuals—consult the European Payments Council (EPC) register.

What happens if the customer doesn’t have sufficient funds when a direct debit payment is processed?

If the customer doesn’t have sufficient funds at the time of payment, the bank rejects the SEPA Direct Debit. Royal Decree-Law 19/2018 specifies that banks can reject direct debits for other reasons. These include mismatches between the names of account holders or fraudulent transactions. Subsequently, the company can reissue the payment or agree on another payment method with the customer. What should a company do if the customer changes a subscription in the middle of a billing period?

If the customer makes any changes that affect the amount of a direct debit during the billing cycle, the most appropriate thing to do is to apply prorated billing. This means that the amount charged by SEPA Direct Debit will be modified based on the actual use of the service during that period.

Does the SEPA mandate need to be renewed for each direct debit payment?

The SEPA mandate only needs to be signed once, at the beginning of the contractual relationship. It is not necessary to renew it in each billing cycle. The company must keep it in electronic format for the duration of the contract in case it is necessary to provide proof of the authorization.