How SEPA credit transfers work for ecommerce

If you pay someone, you are making a credit transfer. The payment method is not important – what matters is that the payment is initiated by the customer and sent to the seller. A SEPA credit transfer is simply a bank transfer made from one bank account inside the SEPA area (mainly Europe) to another. It can be a one-time payment or part of a series of payments that are part of a standing order. The Single Euro Payments Area (SEPA) system is designed so that payments are processed just as quickly inside a country as they are between countries. This means a Spanish customer with a Spanish bank account can make a bank transfer to a French company just as fast as they could if they had a French account.

Should I offer SEPA credit transfers in my online shop?

Yes. There are several good reasons to offer bank transfers as a payment method for your European ecommerce shop. The main reason is familiarity. In 2020, in Germany alone, nearly €57 trillion changed hands via SEPA credit transfer, 21% of which was cross-border. Offering customers their preferred payment methods reduces friction at check out. Less friction means fewer abandoned carts and a higher conversion rate. The other reasons are low processing costs and the absence of chargebacks. While a customer can request that their bank ask your bank to reverse the payment, you are not required to return the money.

How much does a SEPA credit transfer cost?

From the business point of view, bank transfers are great because the fees are much, much lower than credit cards. With Mollie, for example, the fees for bank transfers are €0.25 per transaction plus 0.9%. For your customer, they are almost always free.

How long do SEPA bank transfers take?

Usually, SEPA bank transfers take around 24 hours. Your account should be credited the next morning if your customer makes the payment during banking hours. Transfers made in the late evening, middle of the night, at the weekend, or on a public holiday will take 36 to 48 hours to be credited to your account.

Instant transfers

If it’s an emergency, such as a forgotten payment, it is now possible to make a SEPA instant transfer. The payment is made in as little as 10 seconds, though sometimes it can take the whole banking day for the funds to arrive. Because these transfers are account to account with no intermediaries involved, they work every day of the year including weekends and holidays. Not all banks offer instant transfers and fees for this service vary. If there are costs, the customer usually pays them when they make the transfer. 

Is there a transfer limit?

SEPA transfers are used both by businesses and individuals. You can buy a croissant at the bakery for €2, get Ferraris for everyone in your office, or acquire a unicorn business all with the same simple payment mechanism. 

The limit for credit transfers is one cent less than one billion euros. That’s €999,999,999.99 in case you need something to paste into your online banking. If you’re in a hurry and need the cash to get there now, you’re a bit more limited. SEPA instant credit transfers are limited to €100,000.

How is a credit transfer different from a direct debit?

A credit transfer is a push transaction, meaning the customer has to push or initiate the payment to the business from their own account. If the customer decides not to pay or doesn’t have enough funds, the business cannot take the money from their account. Most of the time, companies won’t even know the account number.

A direct debit is a pull transaction. In this case, the customer has given the business permission to pull funds from their account. Businesses must have a mandate from the customer to do this. Usually, direct debits are used for recurring payments over a longer period of time or for a certain number of instalments.

Can a UK business accept SEPA transfers?

Yes. And European businesses can accept SEPA transfers from UK customers. 

Even though the UK is no longer in the EU, they are still part of SEPA. The same rules apply to transaction size and speed, but the difference is cost. While the transfer part is still free, there is a cost for exchanging the funds between pounds and euros. 

SEPA transactions made easy with Mollie

With Mollie, you can link euro- and sterling-denominated bank accounts. Suppose your ecommerce platform allows you to show prices in different currencies based on customer location or preference. In that case, you can offer them the option to pay in whichever currency is most convenient for them. Find out more about how Mollie can help you manage SEPA credit transfers from customers throughout Europe and the UK. 

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