Guide to SEPA bank transfers

5 min read
SEPA transfers

The introduction of Single Euro Payments Area (SEPA) transfers has created an easy way to make cashless euro payments anywhere in the European Union (EU) and a number of non-EU countries. SEPA transfers are quick, secure, and simple.

SEPA payments have significantly contributed to the European economy and made it more efficient and competitive. They helped eliminate the differences between domestic and cross-border payments and set unified standards in all the involved countries.

This comprehensive guide will explain SEPA transfers, what they are, and how they work. It will also compare SEPA and SWIFT payments and review the benefits of SEPA transfers. Let’s begin by explaining what SEPA is.

What is SEPA (Single Euro Payments Area)?

SEPA is a collaborative process initiated by the European banking and payment industry, which is represented by the European Payments Council (EPC). The EPC has created schemes for direct debits and credit transfers that are applicable to all the countries participating in SEPA.

First introduced in 2008 for credit transfers, SEPA expanded to cover direct debits in 2009. It was fully implemented in the euro area by 2014, and in 2016, the SEPA project started to function in countries located in non-euro areas.

SEPA covers the entire EU and additional countries. The aim of SEPA is to harmonise the way cashless euro payments are made across Europe and make cross-border payments as simple as domestic transactions. SEPA transfers affect all European consumers, businesses, and public institutions.

Which countries are included in SEPA?

SEPA covers 36 countries, including 27 EU member states and a number of non-EU locations:

  • Iceland, Liechtenstein, Norway, and Switzerland, which are within the European Free Trade Association.
  • Andorra, Marino, Monaco, and Vatican City — micro-states that operate in the EU through special arrangements.
  • The United Kingdom, including British overseas territories located in Europe. Even though the UK has left the EU, it still remains a participant in SEPA payment schemes.

What is a SEPA bank transfer?

A SEPA bank transfer is a payment made from one SEPA network country to another. SEPA transfers are made in euros between cross-border bank accounts in the SEPA zone countries.

The main benefits of SEPA transfers are the simplicity and low cost of payments. SEPA makes eurozone money transfers as easy as domestic transfers.

What are the different types of SEPA payments?

There are three different types of SEPA payments. Below are descriptions of each type of payment and how they work.

SEPA credit transfer

SEPA credit transfers are mostly used for one-time payments. To make this transaction, the International Bank Account Number (IBAN), and on some occasions, the Business Identifier Code (BIC) are required. These codes are required by both the sender and the recipient.

SEPA credit transfers normally take one business day to be credited to the recipient bank account.

SEPA direct debit transfer

SEPA direct debit transfers are mostly used for recurring payments, such as loan repayments, phone bills, gym memberships, etc.

This type of SEPA transfer requires the IBAN and sometimes the BIC of the sender and the recipient bank accounts. The main difference between SEPA direct debit transfers and other types of SEPA payments is that this one requires the recipient to initiate the transaction. The sender needs to confirm they allow the recipient to withdraw the payments on a recurring basis.

SEPA direct debit transfers can be of two types:

  • SEPA core direct debit transfer — used by individuals. All SEPA-compliant banks must offer this type of transfer.
  • SEPA B2B direct debit transfer — only offered to businesses. SEPA-supporting banks aren’t obliged to offer it.

SEPA instant credit transfer

SEPA instant credit transfers, also known as SEPA instant or SCT Inst, are the fastest way to make cross-border payments in the eurozone. It enables money to reach the recipient’s bank account in less than ten seconds after the sender’s confirmation.

SEPA instant credit transfers can be made at any time of the day because they don’t depend on business working hours. This is the fastest way of transferring money. The only requirement for these payments is that both the sender and the recipient are clients of SEPA-compliant banks.

What are the SEPA transfer charges?

SEPA transfer costs are the same as regular domestic transfers. In most cases, SEPA transfers are free. However, some banks charge clients for domestic transfers, which also means they charge for SEPA transfers. Who pays the charges, the sender and/or the recipient, also depends on the bank.

Is SEPA transfer a cross-border payment?

SEPA covers all 27 EU countries and a number of non-EU member countries. It enables  the transfer of money between these locations, which makes SEPA payments cross-border. However, SEPA only enables individuals and businesses to make cross-border payments in euros.

What is the difference between SEPA and SWIFT payments?

The main difference between SEPA and SWIFT transfers is their geographical scope. SEPA payments support euro transfers in the SEPA zone countries, while SWIFT covers international money transfers in various currencies around the world.

Another difference is speed. Depending on the type, SEPA payments can be made as quickly as domestic transfers, while SWIFT payments can take days to arrive at the recipient’s account.

However, both SEPA and SWIFT payments share the same goal of providing secure and reliable transactions for individuals and businesses.

What are the benefits of SEPA payments?

The main goal of the SEPA project is to create a competitive and innovative payments market with a unified system for euro payments. The project offers similar legal, technical, and price structures in all the SEPA countries, and this brings various benefits.

Here are the main advantages:

  • Fast money transfers
  • Lower transfer processing costs
  • Reduced bank charges
  • Simplified payment handling
  • Easier cross-border transfers

How can kevin. help?

kevin. payment infrastructure supports SEPA instant transfers in the eurozone. This means that cross-border payments in the 27 SEPA zone countries can be made quickly and conveniently. This enables businesses to serve over 350M users in Europe and receive cross-border euro payments as domestic transactions. With kevin., companies can enjoy quicker settlement times and fewer transaction costs.

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