SEPA Credit Transfer (SCT)

SEPA Credit Transfer (SCT) is the payment scheme that allows a payer to send euros from their account to a payee's account at any participating payment service provider in the Single Euro Payments Area (SEPA), using the same rules, data formats and timescales whether the payment is domestic or cross-border. It is used for salaries, supplier payments, pensions, rent, government payments and everyday transfers by individuals.

The scheme is managed by the European Payments Council (EPC), an association representing payment service providers, which publishes the SCT rulebook. The legal framework comes from EU law, including the Payment Services Directive and the SEPA Regulation, which required euro credit transfers to follow common standards. SCT has an instant counterpart, the SEPA Instant Credit Transfer scheme, and a pull-payment counterpart, SEPA Direct Debit.

SEPA was a project of the European banking industry and EU institutions to remove differences between national payment systems after the introduction of the euro. SCT went live in January 2008 as the first SEPA scheme. For several years it ran alongside national transfer formats, until the SEPA Regulation set end dates for migration, with the main deadline for euro area countries in 2014 and later dates for some non-euro member states and niche products. National euro credit transfer schemes were then retired, so SCT became the standard method for euro account-to-account payments in the area.

SEPA's geographic scope extends beyond the euro area and the EU to include countries such as Norway, Switzerland and the United Kingdom, whose payment service providers can join the schemes for euro payments.

A payer instructs their bank to send a payment, giving the payee's name and International Bank Account Number (IBAN), the amount in euros and optional remittance information. The payer's bank, as originator, sends the transfer through a clearing and settlement mechanism to the payee's bank, which credits the payee. Clearing mechanisms include pan-European automated clearing houses, national clearing systems connected to SEPA and bilateral arrangements, with final settlement typically in central bank money through the Eurosystem's TARGET services.

Key features of the scheme include:

• Euro only. SCT handles payments denominated in euros, whatever the currency of the countries involved.
• No scheme amount limit. The rulebook sets no maximum, though banks may set their own limits.
• Execution time. Under EU payments law, funds must reach the payee's bank by the end of the next business day after the order is received, or one day longer for paper-initiated orders.
• Shared charges. Payer and payee each pay their own bank's charges, and the full amount is transferred without deductions.
• Identification by IBAN. The IBAN alone is sufficient; providers may not require the payee bank's BIC for payments within SEPA.

SCT uses ISO 20022 XML messages. Business customers commonly submit payment files to their bank in the pain.001 customer credit transfer initiation format and receive status reports in pain.002. Between banks, the transfer travels as a pacs.008 FI-to-FI customer credit transfer, with separate messages for returns, recalls and status reports. Structured data fields allow references to be carried through to the payee, which helps automated reconciliation.

Payments that cannot be processed are rejected before settlement or returned after settlement, for example when the IBAN is wrong or the account is closed. Once a transfer has been executed, the payer cannot simply cancel it, but the payer's bank may send a recall request, for instance for a duplicate or a suspected fraud. The payee's bank needs the payee's consent to return funds in many cases, so a recall does not guarantee recovery. These exception processes are collectively known as R-transactions.

Standard SCT is processed in batches and settles within a business day, while SEPA Instant Credit Transfer completes in seconds, at any time. The EU's Instant Payments Regulation requires payment service providers that offer standard euro credit transfers to offer instant ones too, at no higher price, and introduced a verification of payee check that compares the payee name with the account. As a result, instant transfers are expected to take a growing share of SEPA credit transfer volumes, although the standard scheme remains important for bulk and low-urgency payments.

• European Payments Council