Five Tips for a Seamless SEPA Transition

By Myles Dawson, UK Country Manager, Adyen

The new SEPA regulations offer a number of opportunities for e-commerce businesses to gain an edge over competitors. But due to hesitation on the part of merchants and a lack of data-backed insights on how to best approach the changes, most businesses have failed to take full advantage.

Myles Dawson

With a few weeks to go till the August 1 final transition deadline to switch from local Direct Debit Schemes such as ELV and the Dutch Direct Debit to SEPA Direct Debits, Adyen looked in to recent data made available due to an acceleration in SEPA adoption over the past 12 months to analyze exactly where it is that businesses are facing the biggest challenges. Based on this research, we have created this list of key actions that businesses should take.

These are:

1.Review your risk management tools: The risk of chargebacks and fraud attempts appears to be considerably higher with SEPA payments in comparison to a number of old direct debit payment methods, including Dutch direct debit and the German ELV. Due to this, merchants should look for a powerful risk management solution that can be customized for their industry and business model.

2. Consider activating a signature field on the payments page: With SEPA, shoppers have a ‘no questions asked’ refund right valid for 56 days. The majority of shoppers do not seem to be utilizing this widely. However, for markets such as Germany where this right is more commonly used, merchants are advised to consider activating a signature field on the payment page. This is an additional proof point for authorization that reduces the chargeback risk and supports a potential defense against chargebacks.

3. Shop around for the best cost-benefit ratio: Merchants can now select a bank in any country of the payment area where international SEPA payments can be transferred. So it is wise to take advantage of this opportunity to shop around and choose the financial institution that offers the best cost-benefit ratio for your specific requirements.

4. Validate the shopper IBAN on your Payment page: The introduction of International Bank Account Numbers (IBAN) and Bank Identifier Codes (BIC) has had a negative impact on shoppers’ payment conversion because many shoppers are still unaware of their IBAN, and bank cards often do not have a visible BIC. To minimize the risk of conversion reduction, merchants are advised to validate the IBAN on the checkout page.

5. Reassess your payment provider: As SEPA continues to tear down the walls that separate cross-border payments within the single European marketplace, local payment methods such as iDEAL and Sofort continue to be widely embraced within individual markets. But with SEPA direct debits and bank transfers and payouts possible in 34 European markets, merchants should take the opportunity to ensure their payment provider can enable them to leverage the harmonization of payment processes across the SEPA zone.

Finally, remember the SEPA advantages

A significant number of merchants are still cautious about SEPA because the advantages it presents are not always obvious. But it is worth remembering that with the new regulations, cross-border transactions are settled faster, costs for non-domestic transfers are decreased, and accounts can be debited across Europe. This improves cost efficiency and international transaction speed, and particularly benefits businesses that have international customers and service providers.