SEPA Direct Debit

How a SEPA Direct Debit moves through Stripe

Stripe describes three phases. In the submission phase, a payment created before the 10:30 CET cutoff is sent to the banks the same business day, and one created after it goes the next business day. Then comes a refusal window of 5 business days, in which the customer’s bank can reject the debit. After that, the payment appears as successful.

Stripe’s settlement table puts both the success and the availability of funds at T+6, six business days after submission. Its advice is direct: wait at least 6 business days before treating a SEPA Direct Debit payment as successful.

That makes the end of a month awkward. A subscription run collected on the last few business days of September does not settle until October, so September’s billing and September’s settled cash are different numbers for any SEPA-heavy business.

Mandates, creditor IDs and pre-notification

Every SEPA debit needs a mandate, which is the customer’s authorization to debit the account. Stripe can generate the mandate text for you, and the mandate used for a payment is recorded on the charge so you can retrieve it later. A customer can cancel a mandate at any time, through you or through their bank, and that makes every future debit request on it invalid. The Stripe mandate glossary entry covers the object itself.

Each debit also carries a Creditor ID, which tells the customer’s bank who is asking for the money. By default Stripe collects under a Stripe Creditor ID, with your business name or statement descriptor shown as the creditor name. Stripe recommends that EU-based businesses use their own Creditor ID to reduce disputes, and once live SEPA payments have been collected, the Creditor ID can no longer be changed in the Dashboard.

The SEPA rulebook also requires telling the customer each time you debit them. Stripe sends that email by default. If you send your own, it is standard to notify at least 14 calendar days ahead, although Stripe’s mandate text allows notice as late as two calendar days before the debit.

Failures, disputes and refunds

A SEPA payment can come back in three ways, and each one lands in a different period.

A failure happens inside the refusal window, before the payment succeeds. Stripe attaches a failure code, such as insufficient_funds, authorization_revoked or invalid_account_number, and the code tells you whether to retry, collect a new mandate or ask for new bank details. With Stripe Billing’s Direct Debit retries switched on, Stripe retries insufficient-funds failures at most twice, within 30 days, and does not charge a failure fee for those automatic retries.

A dispute happens after the payment succeeds. For eight weeks after the debit, disputes are automatically honored. From eight weeks to 13 months, the customer can dispute only an unauthorized debit, and Stripe gives the bank your mandate, but the bank still decides. Either way, Stripe deducts the amount and a dispute fee from your balance, and there is no appeal. A dispute on a recurring mandate can also deactivate that mandate.

A refund is something you choose to do, for up to 180 days after the payment. Refunds are free, but the original processing fee is not returned, and a refund does not stop the customer from also disputing through their bank. Stripe’s advice is to tell the customer you are refunding so they do not do both.

What it costs

Stripe prices SEPA Direct Debit per country. Its Ireland pricing page lists 0.35 EUR per successful charge, 3.50 EUR per failed payment and 15.00 EUR per disputed payment, with 2% added when currency conversion is required. Check the page for your own Stripe account country before you budget.

The failure and dispute fees are costs with no sale attached. A ledger that tracks only sales and processing fees will drift from the Stripe balance by the failure fee each time a debit bounces, and by the dispute fee on top of the amount each time a customer goes to their bank.