Need to accept payments in Europe?

Need to accept payments in Europe?

What is SEPA and how does it work in Europe?
HowToPay HowToPay

HowToPay is now launching SEPA Payments allowing customers to send and receive SEPA payments in Europe. 

The Single Euro Payments Area (SEPA) is a payment-integration initiative of the European Union (EU) for simplification of bank transfers denominated in euro. As of 2019, there were 34 members in SEPA, consisting of the 28 member states of the European Union, the four member states of the European Free Trade Association (Iceland, Liechtenstein, Norway and Switzerland) and two more.

The aim of SEPA is to improve the efficiency of cross-border payments and turn the previously fragmented national markets for euro payments into a single domestic one. SEPA enables customers to make cashless euro payments to any account located anywhere in the area, using a single bank account and a single set of payment instruments. People who have a bank account in a eurozone country, will be able to use it all over the eurozone. SEPA is now the standard for how things are paid across all Europe. 

SEPA does not cover payments in currencies other than the euro. This means that domestic payments in SEPA countries not using the euro will continue to use local schemes, but cross border payments will use SEPA and euro against eurozone countries.

HowToPay assists business users to accept SEPA payments in Europe and then transfer them anywhere in the world. 

All this makes SEPA an attractive option for businesses. However before rolling it out, it is important to understand a couple of things:  

Unlike credit cards, SEPA does not have an additional authentication layer, such as a CVC check or 3D Secure. Consequently it is important to have good risk management tools in place to offset the threat of fraud. This includes the requirement for KYC / Identification for each and every transaction. HowToPay assists you by requesting and validating uploaded ID by a real person 24/7 to help you verify who you are dealing with. 


A client can perform a SEPA chargeback online up to eight weeks after the purchase, with no questions asked. And in some extreme cases this can be as much as 13 months.

Here are 10 best practices to bear in mind when supporting SEPA Payments: 

1. If you are a retailer, we recommend holding shipment for seven days, to avoid making a loss if the payment is unsuccessful.

2. For ticketing businesses and airlines, it is strongly recommended to only allow SEPA payments if enough time is available to settle the payment before the flight or event (7 Days). In that way there is time to cancel the transaction if it is not successful.

3. Depending on your business model, consider a maximum transaction value for SEPA. A good indicator could be the average transaction value of your chargebacks.

4. If you want to offer SEPA for high transaction values, be sure to crosscheck your customers against local credit scoring agencies. In the case you fail to collect the funds from your shoppers, but have shipped the product, it is common practice to work with local debit collecting agencies.

5. If you are processing with HowToPay, we will collect the funds. This means ‘HowToPay” and HowToPay creditor ID will show on the customer’s bank statement. It is important to communicate this clearly to your customers to avoid confusion and chargebacks. 

6. Communicate clearly on your confirmation page that the payment might take up to seven days to complete, so the shopper is aware they may be charged at a later date if they did not initiate the payment. 

7. Be sure to state clearly in your return/refund policy that refunds will take a few days. This will reduce the chance of a customer performing a chargeback in the meantime. Be aware: SEPA can be charged back by the shopper even if a refund has already been carried out. And consequently it is risky to refund a SEPA transaction if there is an ongoing dispute with the customer. 

8. Make sure you keep your IBAN blacklists up to date in order to identify and block payments from invalid bank accounts. See: 

9. Use available tools to mitigate chargeback risks. For example: set up and keep an eye on your velocity checks, limiting the number of orders a shopper can place within a specific timeframe.

10. Many transactions are refused due to lack of funds on the shoppers bank account. In this case it is worth retrying the transaction later, once the customer is likely to have received his monthly income. So it is recommended to adjust your retry logic based on the refusal reason provided by the customer’s bank.

11. Call your first time customers to make sure the contact details are valid and that its a real customer. Make sure you advise the customers that HowToPay will be sending them a request to upload ID for KYC before proceeding with the transaction.

  • VIA
  • HowToPay