SEPA (Single Euro Payments Area)

The Single Euro Payments Area (SEPA) is a payment-integration initiative under which euro payments between accounts in participating European countries are made with the same formats, rules, speed and charges as payments within a single country. Customers can send and receive euro credit transfers, instant credit transfers and direct debits across the area using only an IBAN, whether the other account is in the same country or another participating one.

SEPA covers the member states of the European Union and the European Economic Area, together with several other countries and territories, including Switzerland, the United Kingdom, Monaco, San Marino, Andorra and Vatican City. It applies to payments in euro only, even in participating countries whose national currency is not the euro.

Work on SEPA began after the introduction of euro banknotes and coins in 2002, when it became clear that cash was single-currency but electronic payments were still split along national lines. The banking industry formed the European Payments Council (EPC) to design common schemes, with support from the European Commission and the European Central Bank. The SEPA Credit Transfer scheme launched in 2008 and the SEPA Direct Debit schemes in 2009. Regulation (EU) No 260/2012, known as the SEPA Regulation, set end dates in 2014 for euro-area countries and in 2016 for others, after which national legacy formats for euro transfers and debits were phased out.

• SEPA Credit Transfer (SCT): a push payment in euro, credited to the payee by the next business day at the latest.
• SEPA Instant Credit Transfer (SCT Inst): launched in November 2017, it makes funds available to the payee within seconds, at any time of day, every day of the year. See SEPA Instant Credit Transfer.
• SEPA Direct Debit Core: a pull payment collected by a creditor under a mandate signed by a consumer, with refund rights for the payer.
• SEPA Direct Debit Business-to-Business (B2B): a variant for business payers, with shorter timelines and no refund right for authorized collections.

The EPC publishes a rulebook for each scheme. Payment service providers join by adhering to the rulebook, and transactions are cleared through automated clearing houses or the Eurosystem's infrastructure and settled in central bank money.

SEPA messages are based on the ISO 20022 XML standard. The payer's bank needs only the payee's name and IBAN; the BIC is no longer required from customers. Charges are shared between payer and payee, corresponding to the SHA option among the OUR, SHA and BEN charge codes, so the full amount sent reaches the payee's bank without deductions by intermediaries. EU regulation also requires that charges for cross-border euro payments equal those for corresponding domestic euro payments.

The Instant Payments Regulation, Regulation (EU) 2024/886, requires payment service providers in the euro area that offer standard euro credit transfers to also offer instant ones, at no higher price, and to provide a verification-of-payee service that checks the payee's name against the IBAN before the payer authorizes the transfer. The obligations were phased in from 2025, with later deadlines for non-euro member states. Payment institutions and e-money institutions also gained access to settlement systems under related amendments.

For businesses and payment companies, SEPA is the main euro rail inside Europe. Fintechs often provide customers with IBANs and virtual accounts reachable via SEPA. Under the Second Payment Services Directive (PSD2), a payment initiation service can trigger a SEPA credit transfer from a customer's bank account. Payments that start outside SEPA, or in other currencies, still travel through correspondent banks and SWIFT before entering the area. The United Kingdom remains a SEPA participant after leaving the EU, while its domestic sterling systems, such as CHAPS, are separate.

• European Payments Council
• European Central Bank