How SEPA works

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SEPA (Single Euro Payments Area) is a single euro payments area that simplifies and standardizes euro transfers between member countries. SEPA allows individuals, companies and organizations to make fast, secure and inexpensive euro transactions within the area, regardless of their location.

Let's look at how SEPA works, step by step:

1. What is SEPA?​

• Objective: To simplify and standardise bank transfers in euros within Europe.
• Participants: 36 countries, including EU countries, as well as Iceland, Liechtenstein, Norway, Switzerland, Monaco, San Marino and the Vatican.
• Basic tools:
  • SEPA Credit Transfer (SCT): Transfer of funds from one account to another.
  • SEPA Direct Debit (SDD): Direct debit of funds from the payer's account (e.g. to pay for subscriptions).
  • SEPA Instant Credit Transfer (SCT Inst): Instant transfers within seconds.

2. How do SEPA transfers work?​

Step 1: Preparing the data​

To make a SEPA transfer, the sender needs to know the following recipient details:

• IBAN (International Bank Account Number): International Bank Account Number.
• BIC/SWIFT (Bank Identifier Code): Bank code (not always required for SEPA).
• Transfer amount and currency (always in euros).

Step 2: Initiate the transfer​

The sender (an individual or a legal entity) initiates a transfer through their bank:

• Via Internet banking.
• At the bank branch.
• Using the mobile app.

Step 3: Processing the transaction​

• The sender's bank checks the data and sends a request via the SEPA system.
• If you use SEPA Instant, the transfer is processed within 5-10 seconds.
• For standard transfers (SCT), processing takes 1 business day.

Step 4: Deposit funds​

The recipient's bank receives the transaction and credits the recipient's account. Fees are usually minimal or non-existent.

3. Advantages of SEPA​

a) Uniform format​

• All SEPA transfers use the standard ISO 20022 format, which simplifies interaction between banks.

b) Speed​

• Standard Transfers (SCT) are completed within 1 business day.
• Instant transfers (SCT Inst) occur within seconds.

c) Savings​

• Fees for SEPA transfers are generally lower than for international transfers via SWIFT.
• In some cases, translations are completely free.

d) Security​

• SEPA uses modern data protection methods such as encryption and authentication.

4. Types of SEPA payments​

a) SEPA Credit Transfer (SCT)​

• Description: Standard transfer of funds between accounts.
• Terms: Up to 1 working day.
• Usage: Payment for goods, services, transfers between individuals.

b) SEPA Direct Debit (SDD)​

• Description: Direct debit of funds from the payer's account with his consent.
• Types:
  • Core: For individuals.
  • B2B: For business (strictly regulated).
• Usage: Recurring payments such as subscriptions, utilities.

c) SEPA Instant Credit Transfer (SCT Inst)​

• Description: Instant transfer of funds within seconds.
• Timing: Up to 10 seconds.
• Use: Urgent payments, e.g. for business or personal needs.

5. SEPA Terms of Use​

a) Currency​

• All SEPA transfers must be made in EUR. If the sender or recipient account is in another currency, a conversion may be required.

b) IBAN and BIC​

• Most SEPA transfers only require an IBAN. However, in some cases a BIC may be required.

c) Geography​

• SEPA is only available in countries within the SEPA area.

6. Example of SEPA use​

Example 1: Standard Translation (SCT)​

1. Anna from Germany wants to send €500 to her friend in Spain.
2. She enters her friend's IBAN and the amount into her online banking.
3. Funds are credited to your friend's account within 1 business day.

Example 2: Instant Transfer (SCT Inst)​

1. A company in Italy urgently needs to pay for a delivery in the Netherlands.
2. She uses SCT Inst and transfers €10,000.
3. Funds are credited to the supplier's account within 5-10 seconds.

7. Conclusion​

SEPA is a convenient and cost-effective way to make transfers in euros within Europe. It simplifies interactions between banks, reduces fees and speeds up transaction processing times. However, it is important to remember that all transactions must comply with the laws and regulations of SEPA participants.

If you have any further questions or need help with a specific aspect of SEPA, write to me - I will try to help!

 

[Man]

SEPA (Single Euro Payments Area) is a single euro payment system designed to simplify bank transfers within the eurozone. Here's how it works:

SEPA Basic Principles​

1. Single space
   • Unites 36 countries (EU + UK, Switzerland, Norway, etc.)
   • All transfers in euros, even between different countries
2. Unification of details
   • IBAN (International Bank Account Number) is used instead of internal details
   • There is no difference between domestic and international transfers in €
3. Processing speed
   • Most transfers are credited within 1 business day
   • New SEPA Instant standard (up to 15 seconds!)

How do payments happen?​

1. Credit Transfer (SEPA Credit Transfer)
   • Sending money using the recipient's IBAN
   • Commission: usually free for customers (depending on the bank)
   • Limit: up to €999,999.99
2. Direct Debit (SEPA Direct Debit)
   • Automatic withdrawal of money (for example, for subscriptions)
   • Prior consent of the recipient is required
3. Instant payments (SEPA Instant Credit Transfer)
   • Available in 22 countries (eg Germany, France, Netherlands)
   • Limit: €100,000 per transaction

Key Benefits​

No hidden fees (if transferring in €)
Predictable crediting time
Easier than SWIFT (no need for BIC codes for some transactions)

Who regulates?​

• European Commission
• ECB (European Central Bank)
• EPC (European Payments Council)

Example:
If you are from Germany and pay for goods in Italy, the transfer via SEPA will be as simple as a payment within one country.

Need details on a specific payment type?