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Single Euro Payments Area (SEPA)

SEPA is an initiative of the European Commission and the European Central Bank supported by European Union governments and banking industries, with the aim to create a more dynamic and competitive business environment for Europe, promoting a more integrated euro payments market.

Within SEPA framework, a modern and harmonized set of rules to all payment services in the European Union has been established to increase transparency, competition, security and efficiency to payments market.

SEPA is an initiative of the European Commission and the European Central Bank supported by European Union governments and banking industries, with the aim to create a more dynamic and competitive business environment for Europe, promoting a more integrated euro payments market.

Its legal foundation is laid by the Directive on Payment Services (PSD) implemented by Member States in 1st November 2009, thus establishing a modern and harmonized set of rules to all payment services in the European Union to increase transparency, competition, security and efficiency to payments market.

The European Payments Council (EPC), which is the European banking industry’s coordination and decision-making body set-up in 2002 for corporate space of payments services, plays an important role in promoting SEPA. EPC is also responsible for the definition of the interbank relationships and in the implementation of SEPA rules, namely the SEPA payment schemes - SEPA Credit Transfer Scheme Rulebook and SEPA Direct Debit Scheme Rulebook.

The focus of this initiative is the integration of the existing national/domestic payment schemes into a single set of European schemes to make euro a single and fully operational currency. In parallel, the use of electronic payment instruments is incentivised and a higher level of safety is provided.

Creating an environment where customers can make cross-border payments in euro, as easy as within their own country while ensuring transparent pricing and promptness to all payments, SEPA major goal is to create the reality of an integrated and efficient payments market after the physically introduction of euro in 2002.

In 2012, The European Parliament and the Council of the European Union (EU) adopted the ‘Regulation (EU) No 260/2012 establishing technical and business requirements for credit transfers and direct debits in euro’. This legislative act also mandated migration to SEPA Credit Transfer and SEPA Direct Debit by 1 February 2014. This deadline was extended to 1 August 2014 by the Regulation (EU) No 248/2014 of 26 February.

SEPA Geographical Area

A total of 34 European countries take part in SEPA - 28 European Union (17 in Euro zone and 11 in non-Euro zone), 3 in European Economic Area (EEA), Switzerland, Monaco and San Marino:

Euro-zone:
Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxemburg, Malta, Netherlands, Portugal, Slovakia, Slovenia and Spain.
Non-euro-area:
Bulgaria, Croatia, Czech Republic, Denmark, Hungary, Latvia, Lithuania, Poland, United Kingdom, Romania and Sweden.
EEA + Switzerland, Monaco and San Marino:
Iceland, Liechtenstein, Norway + Switzerland, Monaco and San Marino.

SEPA Payment Instruments

SEPA Credit Transfer (SCT)

SEPA Credit Transfer supports the transfer of funds from one payment account (originator account) to another account (the beneficiary account). Same rules and conditions are applied to domestic/national and cross-border transfer:

The fee are shared (SHA), this means that the originator and the beneficiary banks may charge fees only to their own clients.
The beneficiary’s IBAN (International Bank Account Number) and the receiving bank’s BIC (Bank Identification Code) must be provided.
The remittance information allowed is up to 140 and the information is forwarded from the originator to the beneficiary without alteration or omission.

SEPA Direct Debit

Cross-border Direct Debit is available and the creditors can collect funds from debtors located in SEPA countries. Two services for the collection of national and cross border payments within SEPA zone:

SEPA Core Direct Debit for consumers and/or corporate
SEPA Business to Business Direct Debit for corporate and public administration

For the debtor, the no-question-asked for refund right increases control over payment, as refunds may be claimed within 8 weeks of debit date for an authorised transaction and 13 months for a non-authorised transaction.

For the creditor, the advantage of payment instructions following a standard format, the need of just one single account for all transactions, the settlement of clear Rules for 'R' transactions (refund, return, reversal, refusal and reject) and the observed timelines for executing a payment transaction, increase transparency and efficiency in account management.

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