ReCharge is excited to announce our new beta feature, allowing European stores the ability to use SEPA Direct Debit and iDeal.
This new payment method will let you directly debit your customers' bank accounts as a form of payment, even if your accounts are with different banks, or you're located in separate countries.
This guide goes through the new beta feature, updates to the ReCharge admin, and how your customers interact with these new payment methods.
SEPA Direct Debit and iDeal are current in beta and open to eligible merchants. To be eligible to use SEPA Direct Debit and iDeal you must:
- Be using Stripe as your payment processor
- Have your store process orders in Euros
- Be using Theme Engine V2, Novum TE, ReCharge Customer Portal Themes, or have a headless customer portal implemented
- Using ReCharge Checkout
Please speak to your Account Manager, or fill out the SEPA and iDeal Beta Program opt-in form if you're interested in participating in the beta. The Product team will be in touch once your request has been reviewed.
SEPA Direct Debit
SEPA Direct Debit is a form of debiting a customer’s bank account directly between banks, using the International Bank Account Number (IBAN) standard. SEPA Direct Debit allows you to debit a customer's bank account, even if the account is held with another bank.
SEPA Direct Debit works across all Euro-zone countries and offers a simple and cost-efficient way to accept payments, especially recurring payments. This process usually involves multiple banks, often operating in different countries. Depending on the banks and countries involved, it may take anywhere from 2 -14 days for the money to be transferred from one bank account to another.
As we are unable to immediately collect payment from the customer when SEPA is used as a payment method, we have introduced both a pending charge and shipment record, as well as a locked subscription, to manage these customers.
iDeal is a bank to bank method that only works between Dutch banks, but settles almost immediately.
This payment method requires customers to authenticate the purchase with their own bank and approve the transaction, making it virtually impossible to use iDeal for recurring payments.
As such, we can use iDeal to process checkout orders and then implement SEPA Direct Debit for recurring payments.
Switching from iDeal to SEPA for recurring payments
Stripe handles the process of switching the payment method from iDeal to SEPA and updates our database with the new payment credentials.
The process to switch payment methods is straight-forward and requires no additional work from you or your customers.
Managing customers using SEPA Direct Debit
Since payments are not captured immediately when using SEPA, we have introduced a few new features to make it easier to manage customers using this payment method.
When a customer checks out with a subscription product using SEPA Direct Debit, their payment is not settled immediately. Instead, we must wait for payment confirmation from the banks involved. While this process generally takes less than 48 hours, it may take up to 14 days for some banks to settle a customer's payment.
To account for the order, we still create the charge and shipping records for any new charges in our database. For checkout orders, we also create the necessary subscription and customer records. However, these records are marked pending until we receive confirmation that the payment has been settled. The pending status is removed once the payment has successfully been settled.
We do not create queued charges in ReCharge, or any Shopify orders until the existing payment has been settled when SEPA Direct Debit or iDeal are in use.
While the charge is in a pending state, we set the subscription to a locked state. This means the charge, shipping information, and subscription cannot be altered, except to be deleted, until the charge is cleared, or returns with an error.
A subscription can be canceled while pending, but no other changes can be made.
Updates to the ReCharge admin
With the new pending state on charges, we have introduced a new tab in the orders list to track charges marked as pending.
The merchant portal has also been updated to highlight when charges, orders, subscriptions, and customers are in a pending state.
One new limitation with this payment method is that you will no longer be able to update the customer's SEPA Direct Debit information on their behalf in the merchant portal.
SEPA Direct Debit requires that the customer gives their permission to debit money from their account, by supplying their IBAN during checkout. Customers must go in and update their information themselves so that they can authorize these changes.
This protects you from any discrepancies as we can trace all changes back to the customer.
In case a SEPA Direct Debit charge results in an error, the charge and shipping records are updated, and the charge enters the regular retry process.
Once the charge is retried, the shipping records are again updated to pending.
Stripe may return the following charge errors depending on the customer's order:
|invalid_account_number||The account number specified does not have the correct number structure.|
|invalid_routing_number||The bank routing number specified does not have the correct number structure.|
|debit_not_authorized||The customer has notified their bank that this payment was unauthorized.|
||The customer’s bank account has restrictions on either the type or number of transfers allowed. This normally indicates that the bank account is a savings or other non-checking account.|
|could_not_process||This payment could not be processed.|
||The customer’s account has insufficient funds to cover this payment.|
||The customer’s bank account has been closed.|
Charge errors on checkout orders
Unlike our other payment processors, with SEPA we now have to wait for the settlement to know if a charge was successful or failed, which means we are unable to confirm at the checkout if there is an error with the charge.
Since we are unable to confirm at the checkout if there is an error, customers will need to access their Customer Portal and update their payment information so that we can try the order again.
Customers are notified of any charge errors at the checkout through our new email notification Delayed checkout payment failed. You can edit this notification by going to Settings > Notifications in your ReCharge admin.
Cancellations and refunds
Due to its delayed nature, SEPA Direct Debit cancellations and refunds are handled slightly differently from regular credit card cancellations and refunds.
Cancellations are not instantaneous when a charge is pending. It is possible to cancel a pending charge, however, at this time we have to cancel the full charge, resulting in canceling the entire subscription.
SEPA Direct Debit transfers cannot technically be canceled. As a workaround Stripe queues up a refund and waits for the initial charge to settle. If the result of the charge is an error, the queued refund is discarded. If the charge is successful, the refund is applied.
A refund can only be applied to a charge once it has been settled, and must be processed within 180 days of the settled transaction.
Refunds can be full or partial but never more than the original charge, similarly to our existing refund processes.
As with the original charges, refunds follow the same delayed process and will cause the charge to enter a pending state again. You can refer to the status reason to determine why an order is in a pending state.
Communicating cancelation and refund requests
Besides planning for cancelations and refunds, there are a few business processes that you'll need to consider.
With multiple banks involved in addition to Stripe, there’s a higher likelihood of confusion for everyone involved. For example, a customer could go to their bank and dispute the charge in addition to disputing the charge with you and possibly Stripe.
As a legal requirement when using SEPA or iDeal, you must make sure that you have the Upcoming charge email notification enabled in your ReCharge notification settings, or use a third party to alert your customers of upcoming orders.
Any upcoming charge notifications must include your Creditor ID, which will need to be added as raw text to your notifications. Please reach out to Stripe's support team if you have additional questions about the Creditor ID.
- If you offer iDeal as a payment option, it will be used for the initial checkout payment and all recurring payments will use SEPA Direct Debit.
- iDeal payments are settled almost immediately, but since they require the customer to be present to authenticate the payment at the time of the charge it can’t be used for recurring payments.
- Unlike our typical payment processors, SEPA Direct debit payments can take up to 14 business days to settle but usually are completed in 24-48 hours.
- Customers and subscriptions are only considered active once the payment has been settled. While the initial checkout charge is pending, they are considered pending.
- If a charge fails, it’s usually due to insufficient funds or a wrong account number. In either case, the charge will enter the regular dunning process.
- Refunds must be processed within 180 days of the transaction. Like the initial charge, refunds can take up to 14 days to process.
Support and Feedback
Please submit any feedback related to this new beta feature through our beta feedback form.
Please contact your Account Manager, or ReCharge Beta Program Support, if you require any additional support.