How to set up and use PayPal Direct Debit?

If you use PayPal for your business in the UK, you can set up PayPal Direct Debit payments to enable fast automatic payments of ongoing bills. That can be handy for paying a subscription or retainer, for example, and allows you to ‘set and forget’ important payments so you never need to worry about missing one.

So - what is PayPal Direct Debit and how does it work? This guide walks through how to set up PayPal Direct Debit, how PayPal’s fees work, and some common questions and answers.

We’ll also touch on Wise Business as a great alternative way to set up Direct Debits to pay bills - with low currency conversion costs when you’re dealing with overseas suppliers, contractors or team members.

💡 Learn more about Wise Business

What is PayPal Direct Debit?

PayPal Direct Debit is a simple way to set up recurring automatic payments, in which you can authorise a merchant to debit your account automatically as long as you know in advance the amount they’re billing you. The funds are then automatically debited from your preferred payment method - such as your bank - and you can also indicate a back up payment method for occasions when your primary payment method can’t be used.

When you set up a PayPal Direct Debit agreement you complete a Direct Debit instruction on PayPal, and the payments are then automatically taken from the payment method you indicate. This can be handy if you’re signing up for a SaaS subscription for example. You’ll complete your Direct Debit agreement - known as a Direct Debit mandate - and then the money is deducted according to your agreed schedule, from your preferred payment method.

If you nominate your business bank account as your payment method you’ll then be able to see the billed amount on your normal bank statements, and can manage, change or cancel the ongoing payments in your PayPal Business account whenever you need to.

What are the fees for PayPal Direct Debit?

There are no specific PayPal fees for Direct Debits. However, it’s important to note that some costs might apply if you’re making payments in foreign currencies. If you sign up for a Direct Debit and PayPal needs to convert your currency to make the deposit in your recipient’s account, a currency conversion fee is likely to apply. In the UK this is usually 3% for business customers on PayPal¹

How to set up PayPal Direct Debit?

To set up Direct Debits from your PayPal account you need first to choose PayPal as your preferred payment method at the checkout. You’ll need to pick PayPal Direct Debit as the payment method you want to use, and then follow the instructions which are given by the merchant you’re shopping with.

Generally this will then require you to agree to the Direct Debit mandate which is set up to follow SEPA standards. You only need to complete this step the first time you want a specific payment to be made.

Here’s how to accept the PayPal SEPA Direct Debit mandate²:

1. Log into PayPal online or on the app
2. Click Wallet and then tap the bank account you wish to use for your Direct Debit payment
3. Tap Direct Debit Instruction, then click Complete setup and Accept

Once you have an active Direct Debit you can then manage it to change your primary or back up payment method in the PayPal app or by logging in online.

Here’s how to find your Direct Debits on the PayPal website when you need to make changes:

1. Log into PayPal online or on the app and go to Settings
2. Click Payments, then Automatic payments
3. Select the merchant for the payment you want to change

Once you’ve selected the correct payment, you can change your payment methods for any PayPal Direct Debit easily. Here’s how:

1. Tap your current payment method
2. Choose a new payment method from those already linked to PayPal, or click Link a new card or bank account
3. Complete the details following the prompts on screen
4. Click Save

PayPal Direct Debit payment methods

You’ll see the PayPal Direct Debit payment methods which apply to your account and payment type, when you arrange your automatic payment. The standard options for PayPal payment methods include³:

• PayPal balance
• Bank transfer
• PayPal Credit
• Card payment
• eCheque

You’ll see which is available when you set up your payment, and can also add additional bank accounts or cards when you’re getting your payments sorted. If you’re making recurring payments in foreign currencies you may benefit from linking PayPal to your Wise Business account, to pay with low currency conversion costs.

Or, you can also skip PayPal altogether and use Wise to set up Direct Debits for your business in currencies like GBP. EUR and AUD. This allows you to pay directly in foreign currencies if you hold them in your Wise Business account, without incurring additional currency conversion fees. That can be handy if your business receives customer payments in a currency like euros, and also needs to pay suppliers or contractors in the Eurozone. Just set up your EUR Direct Debit and pay from the funds you receive from customers in euros, to make the process as streamlined as possible and cut out unnecessary fees for currency conversion.

💡 Learn more about Wise Business

How to cancel a Direct Debit on PayPal?

Once you have a PayPal Direct Debit set up you can manage the payment and make changes in the PayPal app or online, by logging into your account.

Here’s how to cancel a Direct Debit on PayPal:

1. Log into PayPal online or on the app
2. Tap Wallet and then Manage AutoPay
3. Tap the merchant and payment to view or update
4. Tap Remove PayPal as your payment method

You can also follow similar steps if you want to change your payment method, rather than cancelling the instruction entirely.

Here’s how to update your Direct Debit payment method in the PayPal app:

1. Log into PayPal online or on the app
2. Tap Wallet and then Manage AutoPay
3. Tap the merchant and payment to view or update
4. You can update your preferred payment method following the prompts

Send direct debit payments with Wise Business

If you have suppliers in other countries, or would love to trade internationally in the future, it’s super handy to have a Wise Business account.

With this powerful multi-currency account, you can send payments to 140+ and set up direct debits for your international bills. You can hold 40+ currencies in your account at once and switch between them when you need to, always with the mid-market exchange rate.

Get started with Wise Business 🚀

FAQs - PayPal Direct Debit

How long does it take for a Direct Debit payment to process?

The exact length of time it takes for your PayPal Direct Debit payment to arrive with the recipient can vary depending on the payment method you select. Generally, Direct Debit payments can arrive in 1 - 3 days, which makes them a good choice for recurring payments, but not necessarily the ideal option for very urgent transfers.

Can I use Direct Debit for all types of PayPal transactions?

You can use PayPal Direct Debit for any transaction where this is shown as a payment method available. Merchants may change the payment methods they accept and prefer, so if you don’t see this option at the check out you may need to choose a different payment method instead.

What happens if there are insufficient funds in my bank account for a Direct Debit payment?

If your Direct Debit comes due and there’s not enough money in your bank account, PayPal may choose to use your backup payment method to fund the transfer. If there’s not enough money available in the backup, the payment might be declined.

If a PayPal payment is declined by your bank or your card issuer, PayPal will not receive details of why this has happened, to protect your privacy⁴. You’ll need to reach out to the bank or card provider yourself to get more information.

If you have a UK business and use PayPal to manage your company finances, you might find that the PayPal Direct Debit service is a convenient way to set up and manage recurring payments like subscriptions and retainers for contractors. Direct Debits allow you to set and forget important payments, so you won’t miss them in future and can get on with running your business.

If you’re managing international payments, there may be PayPal fees to send foreign currency Direct Debit transfers. Take a look at Wise Business to see if you could be better off - either by connecting Wise to PayPal to manage PayPal Direct Debits in foreign currencies for low fees, or by making Direct Debit payments through Wise directly in currencies like GBP. EUR and AUD.

Sources used in this article:

Sources last checked 25/06/2025