SEPA: A guide for you and your business

Hailed as one of the most significant changes in payments since the euro was first introduced, SEPA (Single Euro Payments Area) is a payment-integration initiative of the European Union that aims to improve the efficiency of cross-border payments.


Before SEPA, the many clearing systems within Europe made cross-border payments more expensive, not to mention fragmented. The introduction of SEPA means that cross-border electronic payments in the euro across SEPA countries can now be as quick and as cost-effective as equivalent domestic payments. Regulation (EC) No 924/2009 ensures that charges for equivalent national and cross-border financial transactions in the euro are the same. All electronically processed payments are covered by the regulation and include:

  • Direct debits
  • Cash withdrawals from cash dispensers (ATMs)
  • Debit and credit card payments
  • Money remittance

How was SEPA rolled out?

In 2002 The European Payments Council (EPC) was established as an alliance of European banking/payments industry representative bodies. The EPC worked with the European Commission to launch the SEPA credit transfer scheme in 2008. In 2011 it was agreed that the deadline for SEPA implementation would occur on 1 February 2014. However, in early 2014 the European institutions responded to calls from businesses that were struggling to become SEPA compliant, granting an additional 6-month transitional period which delayed the final deadline for SEPA implementation to August 2014. All in all, the SEPA project took 12 years to implement: this reflects the scale and complexity of the project.

Who are the SEPA zone members?

According to the European Central Bank as of January 2022, SEPA has 36 members-states: Austria, Belgium, Bulgaria, Cyprus, Croatia, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Republic of Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovenia, Slovakia, Spain and Sweden, the 3 EEA countries of Norway, Liechtenstein, Iceland, and also Switzerland, Monaco. Despite Brexit, Britain remains with SEPA.

IBAN & BIC numbers

Following the implementation of SEPA in February 2014 an International Bank Account Number (IBAN) and a Bank Identifier Code (BIC) are now required to make and receive euro electronic payments. The IBAN has replaced the basic bank account number and the BIC has replaced the sort code. The IBAN is a long number which identifies the account country, the account holder’s bank and the account number itself. The BIC code quickly and easily identifies the beneficiary’s bank. BIC codes are also known as SWIFT codes because they are owned and administered by SWIFT (the global provider of secure financial messaging services).

What it means for consumers

Electronic transfers between bank accounts anywhere in the euro area are swift, secure and seamless. A single bank account can now be used by consumers to make or receive euro-denominated payments to and from anywhere in the SEPA zone. This means that, for example, an Irish consumer, with a property in Belgium can now use their Irish bank account to make regular payments to a Belgian utility company instead of having to open up an additional bank account in Belgium, as would have been the case previously. Finally, there are standard fees for SEPA Credit Transfers and SEPA Direct Debit payments, so cost-wise it doesn’t matter whether a SEPA payment is being sent to an Irish bank account or a Belgian bank account.

What it means for businesses

Allowing greater flexibility in performing euro banking transactions, SEPA provides several benefits to businesses. Numerous and varying international payment systems have long presented challenges to businesses making and receiving international payments. However, with SEPA, a standardised payments infrastructure, new possibilities are open for businesses seeking international opportunities. Increased transparency and faster settlement periods will improve cash flow and reduce costs. A range of new innovative products will also be more readily available to corporate payment systems users from service providers.

Standardised message formats

In the world of payments processing, the role of the data format used to exchange information is crucial. ISO 20022 messages are available for customers to bank and bank-to-bank payment, providing a messaging solution for the complete end-to-end payments chain. The new ISO 20022 XML standard will now apply to the SEPA Credit Transfer and SEPA Direct Debit Schemes, meaning a single standard now works across all bank and market infrastructures. Essentially it provides a means of developing a well-structured financial messaging service and also unifies the many existing standards. Simplification of messaging structure will reduce the complexity of messages and the common standard will reduce the cost of maintaining multi-bank formats.

SEPA and non-euro countries

In the UK, domestic credit transfers are linked to three clearing houses for sterling (GBP) payments, namely BACS (smaller, non-urgent payments) and CHAPS/Faster Payments (urgent high-value payments). UK customers can still send payment orders in sterling in the format that they have always used as the SEPA End Date Regulation has not impacted this. However, all domestic credit transfers in the euro will have to be migrated to SEPA Credit Transfers by 31st October 2016. This means that non-euro countries for example will need to use XML as the file format to initiate euro payments by 2016 at the latest. Currently, UK citizens with a holiday home in Spain for example can pay utility payments on that property from their sterling account. The transaction will process in euro but will be subject to foreign exchange fees.

Fexco International Payments offers advice on and makes SEPA payments on behalf of existing and new clients. If you are transferring euros to a SEPA bank account, we offer competitive rates and unbeatable payment solutions. Register with us today and discover how you can save on your international money transfers. Alternatively, you may contact us to discuss your payment needs, as we can guarantee to provide a payment solution that aligns best with your business.

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