Payment Methods in Spain: What Is Direct Debit and How Does It Work?

Payment Methods in Spain: What Is Direct Debit and How Does It Work?


Direct debit is a simple, secure and convenient payment method that allows you to automate recurring payments in your bank account.

In Spain, direct debit (also called domiciliation) is a common and preferred way to pay for many recurring expenses automatically, without having to make manual payments every month - or even remember them 🙂

A direct debit is an arrangement between you, your bank, and a service provider that allows them to directly withdraw money from your bank account in order to pay for your bills.

In this blog, we explain how direct debit mandates work, their pros and cons, and how to avoid your direct debit payments failing due to lack of funds.

What is a direct debit mandate?

A direct debit mandate is an authorization from you, as a bank account holder, to allow a business (typically a service provider), to collect payments from your bank account.

This payment method is particularly common for recurring payments, and can include a wide range - from monthly utility bills to online subscriptions, accounting services, insurance, healthcare, and more.

In Spain, you can expect to set up the following direct debit payments, often without being given the alternative of manual bank transfers or cash payments:

  • Utility bills (energy, water, Internet, landline, etc)
  • Social security payments
  • Accounting services
  • Gym memberships
  • Private healthcare subscriptions
  • Daycare and schooling fees

How to set up a direct debit payment

You can set up a direct debit mandate either through a signed agreement with a service provider, or by giving a mandate to your bank.

This is typically done by completing a direct debit mandate form, which allows your service provider to withdraw funds from your account on a recurring basis.

The mandate includes the following details:

  • Bank account holder name
  • Bank account number (IBAN)
  • Bank identification code (BIC)
  • Reference of the direct debit contract
  • Payment amount
  • Payment frequency (monthly, quarterly, yearly)
  • Start date
  • SEPA Mandate - this refers to those domiciliations that comply with the SEPA (Single Euro Payments Area) standard. It means that direct debit can be enabled across bank accounts within the SEPA zone, as opposed to only domestic Spanish accounts.

IBAN: International Bank Account Number. It uniquely identifies your bank account. You can learn more about IBAN and how to find yours here.

Once the mandate is in place, the service provider initiates the payment on the agreed date.

The amount specified in the mandate is automatically deducted from your bank account and transferred to the service provider.

Direct debit pros and cons

The pros

Direct debit has several advantages over manual bank transfers.

  • Simplicity: once set up, direct debit mandates require minimal ongoing effort from you.
  • Time-saving: they eliminate the need to visit the bank or go online to make each payment yourself.
  • Expense planning: you can anticipate and plan for your upcoming costs.

The cons

Some drawbacks of direct debit include:

  1. It requires a domestic or SEPA account - to set up a direct debit mandate in Spain as a non-SEPA resident, you will need to open a bank account with a Spanish bank. See here the SEPA member states. Be aware that Spanish banks typically practice higher account fees for non-Spanish residents.

  2. Lack of control: while payment dates are usually fixed, they are set by the service provider, and you cannot select the date on which the withdrawal will take place. This can easily get misaligned with your monthly pay date.

  3. Account balance: you have to make sure you maintain sufficient funds in your account to cover all your scheduled payments. Otherwise, you risk being charged additional fees or even experience service interruption.

What to do if a direct debit fails

Insufficient funds is the most frequent reason why a direct debit payment can fail. Service providers will often retry to charge your account, but if unsuccessful they may simply block your use of the service (with or without notice).

To make sure your direct debit payments don’t fail due to insufficient funds, use to add money to your Spanish account in seconds.

With you can move money from cards issued in over 200 countries to your Spanish account in just seconds, regardless of the currency of your card. See here our list of supported destinations.

Say you need to move money from your GBP account to your Spanish euros account. To do so, use to transfer the funds using only the 16 digits on the card associated with your Spanish bank account. No IBAN, BIC, or recipient address are required and money is delivered instantly.

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You can get started with here.

It may also happen for a direct debit to fail for other reasons: for example if the IBAN is incorrect, if your bank account has been blocked, if the bank doesn’t accept direct debit, if the mandate number is not valid, and more.

Always double check the information when creating a direct debit mandate and check that the first scheduled debit was processed correctly.

How to ask for a direct debit refund

Can you get your money back from a direct debit payment in Spain?

Yes, but only in certain situations, and depending on whether the charge was authorized or not.

If the direct debit was authorized, you can get a refund in one of these cases:

  • The initial amount debited was not specified
  • After several debits of the same amount, one debit significantly exceeds the previous payments.

In this case, you can get a refund within eight weeks of the debit.

If you did not authorize the direct debit, you can reject it without having to meet additional conditions for the following 13 months.

In either case, your bank has 10 business days to refund the full amount or indicate the reason why they rejected your request.

Read more about how to get a direct debit refund.

Modifying a direct debit payment

You can modify a direct debit at any time.

To change the details of a direct debit payment (such as your IBAN or your name), you need to get in touch with your service provider to inform them of the changes.

Typically, any changes have to be communicated in advance (up to a given calendar date or deadline before your next scheduled payment). Otherwise, changes will not be processed before your next payment.

How to cancel a direct debit mandate

You can cancel a direct debit mandate whenever you wish or if your contract terminates. Often, service providers will automatically stop charging you and you need to take no further action.

Generally, Spanish banks also allow you to cancel direct debit mandates from their online bank portal or the mobile banking app.

Summing up, direct debit mandates are a convenient, efficient, and common way to manage recurring payments in Spain.

Before you authorize direct debit payments, make sure you understand the conditions and potential risks in order to avoid issues with both your bank and service providers.

Frequently Asked Questions

What is the difference between a direct debit and a regular bank transfer?

A direct debit is an automated payment method where a business is authorized to withdraw funds from your bank account on a regular basis. This works between domestic and SEPA accounts. A bank transfer, also known as a wire transfer, is a manual, one-time transfer method from one bank account to another. It can be local or international.

How is direct debit different from a subscription payment?

Direct debit involves automated withdrawals from your bank account by a business or service. Payments for subscriptions are activated by the customer, not the business, and are often made using credit or debit cards instead of a bank account.

Can I add money to my Spanish bank account using

Yes, you can use to add money to your Spanish bank account as long as you have a payment card associated with that bank account. You can issue a card anytime, sometimes free of charge, from your mobile banking app.

Remember that works with both physical and virtual cards.

To make a transfer, you may use any of your other cards (issued in any of 200 countries and in any currency) and introduce only the 16 digits on your Spanish card to complete the transaction.

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