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Understanding Single Euro Payments Area (SEPA) Payments

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Electronic SEPA payments are used in SEPA participating countries across Europe to make cashless payments in euro at the same cost as domestic payments. 

Overview of Single Euro Payments Area (SEPA)

Single Euro Payments Area (SEPA) initiative makes cashless international payments as simple and inexpensive as domestic payments. It creates more competition in the payments industry by creating one ‘payment services’ market, which lowers prices for consumers. 

The SEPA regulatory initiative’s legal framework was created by the European Commission in the European Union to harmonize cashless electronic payments across Europe, including the eurozone. The European banking and payments industry, represented by the rule-making European Payments Council (EPC), launched the SEPA initiative. 

36 countries, including some non-euro countries, participate in SEPA, according to the European Central Bank | Eurosystem website. See the countries list below.  SEPA is an established home market area for making cross-border Euro bank transactions. 

Essentially, SEPA simplifies the international money transfer process by making it equivalent to domestic transactions. This means even if you’re transferring funds between two banks in different SEPA countries, you can enjoy a fast transaction and minimal transfer fee.

What is SEPA Payment Method?

SEPA payments are cashless payments in euro currency that are processed via the Single Euro Payments Area network to facilitate cross-border bank transfers in 36 Eurozone and non-euro area countries. The SEPA payment method makes cross-border transfers fast and cost-effective.

The SEPA payment method includes payment processing rules from the European Payments Council, known as schemes, that Payment Service Providers (PSP) use to make SEPA payments. 

SEPA payment schemes include direct debit and direct credit, including instantaneous payment to e-commerce merchants and online sellers through instant credit transfer. 

EU regulation relating to SEPA requires banks to make the same charges for domestic and cross-border electronic payment transactions in euro. Payers or payees may incur currency conversion fees (or split the fees) to make payments in euros. 

According to the EU website:

“The principle of equal charges both for national and cross-border payments applies to all electronically processed payments in euro, including:

  • credit transfers
  • direct debits
  • withdrawals at cash dispensers (ATMs)
  • payments by debit and credit cards
  • money remittance.”

SEPA Payment Processing Schemes

SEPA  payment schemes are a set of rules for Payment Service Providers (PSPs) developed by the European Payments Council (EPC) for electronic payment processing transactions. Over 43 billion SEPA transactions are made annually, with equal amounts from credit transfers and direct debit schemes. The EPC updates SEPA schemes every two years. 

SEPA payment schemes include rules for :

  • SEPA Credit Transfer Scheme (effective January 2008)
  • SEPA Instant Credit Transfer Scheme  (effective November 2017)
  • SEPA Direct Debit Core Scheme  (effective November 2009)
  • SEPA Direct Debit Business-to-Business Scheme (effective November 2009)

SEPA Credit Transfer Scheme 

The SEPA Credit Transfer (SCT) scheme is used by payment service providers (PSP) to transfer money between two bank accounts in SEPA participating countries using the euro currency. 

SEPA Instant Credit Transfer Scheme

The SEPA Instant Credit Transfer (EPC SCT Inst) scheme is used to make instantaneous cashless payments via bank transfer to retailers and other online sellers from mobile and Internet-based eCommerce transactions in European SEPA countries. 

SEPA Direct Debit Core Scheme 

SEPA Direct Debit (SDD) Core is a consumer scheme for paying bills, offering transaction automation in European SEPA countries. SEPA direct debit is a pull transaction used for recurring bill pay transactions. SEPA direct debit requires approval by the payer through a mandate form provided by the payee. 

Conducting a SEPA direct debit means the payee is collecting a Euro-denominated payment from your account. The payee receives a request from you to pull funds from your account and then initiates the payment. This type of payment is bank to bank, meaning there is no card network involved. The entire payment process is performed between the payer’s and payee’s banks.

It’s important to understand that a SEPA direct debit is only conducted in Euros. Even if both banks involved in the transaction are not Euro-based, currency exchange will take place, which may come with a fee. The payer and payee will decide who pays for the conversion fee or if it will be split. The payee must have your IBAN to collect a SEPA payment.

A SEPA direct debit transaction is not a form of instant payment. Generally, it will take a minimum of two interbank working business days to process; this applies if it is conducted under the business-to-business (B2B) SEPA direct debit scheme. When performed under the core scheme, it takes a minimum of three interbank working days.

Under the SEPA core direct debit scheme, a payee will submit the collection request at least five interbank working days before your payment is due and at least two days in advance for any subsequent payment collections. 

SEPA Direct Debit Business-to-Business Scheme

SEPA Direct Debit (SDD) B2B is a business-to-business automated payment scheme for paying bills, offering transaction automation in European SEPA countries. 

Under the SEPA B2B direct debit scheme, the payment request only has to be submitted one interbank working day before the payment due date. With this in mind, if you want to make a cross-border SEPA direct debit payment in the quickest manner possible, the SEPA B2B direct debit scheme provides the fastest avenue.

Benefits of SEPA Payments

The most notable aspect of the SEPA system is the ability to make Global ACH payments. This payment method allows you to make cross-border payments in a timely manner without the high transaction fee that is often associated with international wire transfers. It also eliminates the hassle of using paper checks.

You can achieve optimal tracking with a payments platform that automates global ACH payments. This gives you a bird’s eye view of each payment, including payment status updates, invoice due dates, and failed payments. You can make affiliate payments with the push of a button or have them automated to ensure each affiliate is paid on time.

What Countries Can Use SEPA

Not all 36 participating countries that use SEPA are in the euro area or European Union (EU). 

For example, the UK is still one of the SEPA countries, although it left the EU through its Brexit breakaway procedure on January 31, 2020. 

Besides the UK, non-EU SEPA countries include Iceland, Liechtenstein, Norway, and Switzerland, which belong to the European Free Trade Association (EFTA). Andorra, Monaco, San Marino, and the Vatican City State / Holy See are also non-EU countries using SEPA. 

The EU euro countries and Iceland, Liechtenstein, and Norway are in the European Economic Area (EEA)

A list of 36 SEPA countries from the ECB’s interactive map is:

EU member states with euro currency

  1. Austria
  2. Belgium
  3. Cyprus
  4. Estonia
  5. Greece
  6. Ireland
  7. Italy
  8. Finland
  9. France
  10. Germany
  1. Latvia
  2. Lithuania
  3. Luxembourg
  4. Malta
  5. Netherlands
  6. Portugal
  7. Slovakia
  8. Slovenia
  9. Spain

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EU member states with non-euro currency

  1. Bulgaria
  2. Croatia
  3. Czech Republic
  4. Denmark
  5. Hungary
  6. Poland
  7. Romania
  8. Sweden

Non-EU SEPA country

  1. Andorra
  2. Iceland 
  3. Liechtenstein
  4. Monaco
  5. Norway
  6. San Marino
  7. Switzerland
  8. United Kingdom (UK)
  9. the Vatican City State / Holy See

How Do You Set Up SEPA Payments? 

Setting up SEPA transfers is similar to the way you would set up an ACH transfer in the US. The steps to setting up a SEPA payment are as follows:

1. Provide the payer or creditor’s bank account information and payment amount.

2. Provide the payer with an “SDD Mandate.” This is an authorization agreement, mandated by the European Payment Council (EPC), which allows the payer to authorize the biller to collect funds from the payer’s account.

3. Set up the customer, or payee’s bank account for SEPA Direct Debit.

4. Submit the payment, or payments for processing.

Choosing a global payment platform that automates cross-border transactions can improve your bottom line, enhance compliance, and simplify your ability to get funds to your suppliers on time, every time. But not all global payment platforms support the SEPA payment method. Choosing one that does is vital to comply with International Bank Account Number (IBAN) requirements. IBANs are needed to make a cross-border payment using the SEPA system.

Making global payments comes with multiple benefits, including improved vendor and supplier relationships, and the ability to negotiate pricing discounts. Identifying which global payments to make can be confusing at first. For example: Did you know that if you or your payee is part of the Single Euro Payments Area (SEPA), you’re qualified to make Global ACH payments?


Are SEPA payments only in euro? 

Yes. SEPA payments are only made in euro (EUR) currency. 

Is SEPA the Same as IBAN? 

Is an IBAN Number Necessary to Send a SEPA Payment?

What is the difference between a SWIFT and SEPA payment?

What is the difference between a SEPA credit transfer and a SEPA direct debit?

What is the difference between variable recurring payments (VRPs) and SEPA direct debit? 


SEPA payments have lowered pricing to equate cashless electronic euro payment transactions domestically and across Europe in SEPA participating countries.

 Like wire transfers, SEPA payments may be made for large transactions. But SEPA payments have a much lower transfer fee. The European Payments Council sets maximum payment amounts for each type of SEPA payment scheme in its rulebooks. 

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