What Is SEPA In Banking

Ivan Skladchikov
February 12, 2020
What is sepa in banking article featured image

Everyone dealing with money have encountered the term SEPA. For example, you may have seen it in connection with cryptocurrency.
Some exchanges offer to buy Bitcoins or other cryptos using a SEPA transfer. In this article, we will explain what SEPA in banking is. Also, you will know what problems this scheme targets and how it may be useful for companies and individuals.

SEPA Definition And Overview

What is SEPA in the banking context? This abbreviation stands for the Single Euro Payments Area. In this area, businesses and citizens are able to make and receive euro payments within and outside their countries. And all these actors have the same rights and responsibilities and operate under equal conditions. 

Here are some interesting facts you should know about SEPA:

  • It was the initiative of the Banking Sector. Other driving forces behind it are the European Central Bank and the European Commission.
  • The SEPA initiative was to contribute to further European integration after the euro introduction. 
  • Due to SEPA, people can transfer euros with the same ease they exchange euro coins and banknotes.
  • SEPA now includes 36 member states.
  • SEPA does not apply to currencies other than EURO. 
  • The legal basis for the SEPA establishment was the Payment Services Directive. The EU passed this directive in 2007.
  • SEPA-based transfers replaced national payments in 2011. 
  • There over 19 bln SEPA credit transfers (STC) and more than 20 bln SEPA direct debits (SDD). We will explain both payment schemes later.
SEPA: harmonized euro credit transfers between European banks.
Image source: European Payments Council

What Is SEPA Payment: The Goals

The major goal of SEPA was to facilitate cross-border transfers. In fact, it was necessary when the previously separated national markets merged into a single one. Due to SEPA introduction, people got an opportunity to freely move euros across banks in the area, using the same set of payment tools. For instance, the citizens working in the eurozone could use a single bank account to get paid or send money to another country.

In general, SEPA meant to reduce the cost of moving money around the member states.

SEPA Members

There are 36 states SEPA covers.
28 of them are member states of the EU, namely:

  • Germany
  • Austria
  • Belgium
  • Cyprus
  • Estonia
  • Finland
  • France
  • Greece
  • Ireland
  • Italy
  • Luxembourg
  • Malta
  • Holland
  • Portugal
  • Slovenia
  • Slovakia
  • Spain
  • Bulgaria
  • Czech Republic
  • Denmark
  • Hungary
  • Latvia
  • Lithuania
  • Poland
  • Romania
  • Sweden
  • United Kingdom
  • Croatia.

Other SEPA members are Monaco, Norway, Switzerland, Iceland, Liechtenstein, Andorra, San Marino, and Vatican.

What Is SEPA Transfer In Banking And How It Works

Let’s see what SEPA transfer means for banking.
Basically, any SEPA payment is a credit transfer that complies with a certain standard. This standard covers any type of euro payment on the Single Euro Payment Area. 

To make a SEPA credit transfer (SCT), the sender (payer) and receiver of the payment (payee) should have their bank accounts in IBAN format.

IBAN stands for (International Bank Account Number). Every SEPA account has such a number attached to it. IBAN consists of a country code, bank code, and the account number. Due to this unified system, cross-border transfers became easier and faster to process.


SEPA: today and tomorrow.
Image source: Deutsche bank

SEPA Instant Credit Transfer (SICT)

Sepa Instant Credit Transfer makes it possible for your money to travel between bank accounts 24/7. Moreover, there is a plan to make all payments almost instant in the future. Of course, it won’t happen overnight, but they are working on it.

Real-time payments mean that all the banks involved will be able to process transactions equally fast. Right now, over half of all the SEPA banks participate in this program. It’s predicted that most financial institutions will embrace it in the nearest future.

Actually, the newest SEPA payment scheme SCT Inst will allow us to transfer funds from between accounts in 10 seconds or less. Compare it with a ‘classic’ SEPA that takes up to one business day.  

How SEPA Direct Debit scheme works. Image source: Quora

What Is SEPA Direct Debit (SDD)

SEPA Direct Debit is an interbank payment scheme.
SDD makes it possible to collect euro-denominated payments between the debtor (sender) and creditor (receiver). It is a set of rules and procedures common for all the participating banks across Europe. They have to provide this service within the set time frame and meet other standards.

SEPA transfers: Benefits For Businesses

It’s obvious that SEPA Credit Transfer makes your business go round faster and with less friction. 

You can send and receive funds almost in real-time, no matter the day. Such a fast financial metabolism contributes to better business development.
It increases the motivation of your employees, contractors, and providers. If you export your products to other EU countries, you save a lot of money on cross-border transfers that used to cost huge.

In general, the positive impact SEPA has on companies is hard to overestimate. The size of this impact depends on what a company does, what sector it operates in and how big it is. It also depends on what kind of product/service it provides. 

In general, SEPA is very beneficial for business environment. It ensures faster settlement and helps penetrate new markets. It all adds value to the global and local economy.

SEPA transfers: Benefits For Individuals

According to the European Commission, there are many benefits for private customers, too. Due to SEPA,  you can use your card no matter where you stay in the euro area. It’s very convenient when you move around a lot.

SEPA made cross-border transfers easier and faster, and it’s a big deal for individual consumers, too. For instance, if you are temporarily working in France, you can send money to Greece. It will arrive within a set period of time and without any unexpected deductions on the way. All the fees and charges banks apply to your transfer are clearly stated. (It’s a big relief, indeed. We all know that when you send funds abroad, there are some hidden fees hard to calculate).

You can also pay an electricity or water bill from another SEPA country. Say, you are currently staying in Italy, but have a house in France to take care of. For frequent travelers, it’s a life-changing opportunity.


Many popular cryptocurrency exchanges support SEPA bank transfers.
Image source: WunderBit

SEPA And Cryptocurrency Exchanges

SEPA payment system can help you purchase BTC or other cryptocurrencies in a quick and convenient way. You can do it through a cryptocurrency exchange that supports this method. 

Among the most popular SEPA-friendly platforms are Coinbase, Coinmama, and Bitpanda. Exscudo exchange now supports SEPA transfers, too. 

Hopefully, we have the SEPA topic covered for you!

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