SEPA is an acronym for the words "Single Euro Payments Area".

SEPA is an acronym for the words "Single Euro Payments Area".

SEPA encompasses the 27 member states of the European Union, Iceland, Liechtenstein, Norway and Switzerland. It will be the area where all economic actors, both citizens and companies can make and receive payments in euro, under the same basic conditions, rights and obligations, regardless of their points of origin and destination.

Created under the impulse of the financial institutions and the support of other European institutions, such as the European Central Bank and the European Commission, the SEPA initiative involves the creation of a series of infrastructures and new standards that pursue equality of incoming and outgoing payments made by credit transfers, direct debits and card payments.

The successful implementation of these processes will bring substantial financial benefits to all parties involved and to society as a whole.
 

• SEPA will offer consumers more efficient management of their payments, enabling them to perform all payments to any country within the SEPA area centrally from one bank account.

For instance, people living or working in a European Union country will no longer need one bank account in their country of origin and another one in the country of residence, where they pay their receipts, rent, etc... From now on, they will be able to carry out all transactions from one single account, for example the one they have in their native country.

• It will allow for the centralisation of business. This will provide significant advantages to the companies, which will no longer need to maintain accounts in every country in which they operate. They will also be able to improve their accounting management thanks to a unified payment format, saving them both time and money.

• It will reduce the cost of cross-border payments with credit and debit cards and electronic credit transfers to the level of transactions within national boundaries.

• Point-of-sale terminals used in establishments for card payment will become increasingly standardised, allowing merchants to accept a wider range of cards.

• Increased market competition, which will eventually translate to new product innovation, such as e-invoicing, mobile or Internet payment initiation, airline e-tickets, credit advice or e-reconciliation, and better prices and conditions for the users.

• Reduction in the settlement time of cross-border payments to 3 business days.

• Higher level of integration among all economic actors and among the countries within the SEPA zone.

• Customers will find it easier to compare services and prices of the three payment instruments: credit transfers, direct debits and card payments.

The primary objective of the Single Euro Payments Area is to make payments within the European Single Market, in particular credit transfers, direct debits and card payments, as easy, efficient and secure as national payments within a member state.

SEPA furthermore aims to contribute to further European integration, by means of a competitive and innovative small-payments market within the Euro zone, which can contribute to a better level of services, more efficient products and cheaper payment alternatives.

Therefore, SEPA pursues complete monetary integration throughout the European territory by means of:

• a single currency, in use since 2002
• a single set of euro payment instruments - credit transfers, direct debits and card payments
• the development of a series of efficient processing infrastructures for (euro) payments
• the use of common technical standards in all member states
• the application of common business practices
• the creation, for many years and up until now, of a harmonised legal framework that allows us to successfully complete the abovementioned goals and objectives.
• ongoing development of new customer-oriented services.

Credit transfers

A SEPA credit transfer is a payment order from the payer's bank to the beneficiary's bank, which satisfies the following criteria:

 

• It is a "SHARE" transfer, which means that the transfer costs are borne by both parties of the transaction.

The sender pays a fee to his bank, which is less than that of an "OUR" transfer (all fees are borne by the sender), and the beneficiary will pay his bank the fee established for this type of payments.

• The full amount of the transfer is credited to the beneficiary's account. The beneficiary's bank will afterwards charge him independently for the corresponding service fee.

• There is no limit on the value of the payments, but they must be made in Euro and sent to a country within the SEPA area.

• The maximum settlement time is 3 business days.

• The customer must provide complete information of the banks of origin and destination, identified by means of their IBAN and BIC.

Direct Debis

Direct debits are credit transfers authorised by both parties, initiated by the beneficiary's bank, with express consent of the payer. Direct debits are often used for receipts and invoices and they must satisfy the following features to be considered SEPA payment instruments:

• They must be made in Euro and sent to a country within the SEPA area.

• They cover both recurrent and one-off payments.

• The maximum settle time is 5 business days for the first payment, and 2 business days for recurring payments.

• The customer must provide complete information of the banks of origin and destination, identified by means of their IBAN and BIC.

Card payments

In the case of card payments, the implementation of the SEPA will allow:

 

• Cardholders to pay in Euro with one card all over the SEPA area, limited only by brand acceptance by the merchants.