SEPA: What is it, how it works, and how to make a payment

European lawmakers have long wanted to make cross-border Euro bank transfers as easy as domestic payments within the European Union (EU). And this is where SEPA, or Single Euro Payments Area, comes in.

What is a SEPA transfer?

SEPA is a way to make quick and easy euro transfers to and from many European countries. Here's how:

• A Single Euro Payments Area (SEPA) transfer is a standardised payment method that allows individuals and businesses to make credit transfers or direct debits to anyone located within the SEPA zone, which includes 36 European countries.
• SEPA’s international bank transfers are designed to be as efficient as domestic cashless transfers and to drive quick and affordable cross-border transactions.

When were SEPA payments enforced?

SEPA credit transfers were officially enforced in 2008, to simplify bank transfers in euros.¹ The EU fully implemented SEPA credit and debit transfers across Eurozone countries by August 2014, with some non-EU countries gaining access by 2016.

SEPA is designed so all euro credit transfers and direct debits are executed under a common set of standards and procedures.

Of the 36 countries that participate in SEPA, some are EU members with the euro as their currency, others are EU members that have retained their own currency, and others are non-members or former members—such as the UK.²

SEPA transfers versus SWIFT transfers: What is the difference?

SEPA should not be confused with SWIFT. The latter is a global network for payments and international financial messaging between banks. Other key differences include:

• Geographic scope. SEPA is limited to European countries (including the outermost regions of the European Union), enabling euro-denominated transactions. SWIFT supports worldwide bank communications and multiple currencies.
• Goals. SEPA focuses on simplifying payment transactions across European countries (including the outermost regions of the European Union) borders, making them as easy as domestic payments. SWIFT has broader uses, such as financial communications (for example, messaging about large-scale international trade).
• Transactions. SEPA transactions may be faster and less costly than SWIFT transfers. Standardised SEPA processing within European countries (including the outermost regions of the European Union) involves fewer steps and parties.

SEPA payment instruments

As part of the SEPA framework, two payment instruments help streamline transactions.

• SEPA Credit Transfers (SCT). This instrument allows for funds to be transferred from one bank account to another and is typically used for one-time transactions. SCT funds are usually credited within one business day.
• SEPA Direct Debits (SDD). SDDs enable automatic debits from a customer's bank account to pay for recurring services or bills (such as utilities or internet). These debits can be arranged between customers and businesses as well as between businesses.

How to make a SEPA transfer

A simple SEPA transfer typically involves these steps.

• Checking identity and account details. All necessary identification and account details for both the sender and the receiver are verified to comply with anti-fraud and regulatory requirements.
• Entering the sender’s information. When sending from the UK, the sender's full postal address must be included.
• Entering the recipient’s information. The recipient’s international bank account number (IBAN) and bank identifier code (BIC) are entered to identify the specific bank and account.
• Entering the amount. The amount in euros to be transferred is specified. (SEPA transfers only facilitate transactions in euros.)
• Confirming and sending. All details should be reviewed for accuracy. Confirming the transaction initiates the transfer. The funds should be credited to the recipient that same day.