What is SEPA (Single Euro Payments Area) and How Does It Work?

Jelle van Schaick
2 mins

  • Knowledge hub

If you operate in the payments or banking industry in Europe, you’ve probably heard the term “SEPA” before. We’re going to clear up some confusion about SEPA payments and what they mean for your business.

SEPA stands for the Single Euro Payments Area of the European Union, which aims to create a unified payments area, with one set of payment rules for domestic and cross-border European money transfers. It’s intended to simplify and harmonise cross-border payments and domestic payments in euros within participating countries. SEPA comprises all 27 EU member states as well as the United Kingdom; the four EFTA countries,Iceland, Norway, Liechtenstein, Switzerland; and the micronations of Monaco, San Marino, Andorra and Vatican City. 

The purpose of SEPA

SEPA is a program designed to make cross-border payments for EU residents as easy and inexpensive as domestic payments. SEPA makes it possible for retailers to directly debit accounts in another member country and for residents of member countries to receive direct deposit payments and pay bills electronically, for free or nearly free even across borders. The SEPA system is designed to promote labour mobility and economic integration among its member countries. It provides more competition in the financial services industry by creating a single market for payment services. The system will lead to lower prices and better service for consumers, and that’s something we can all get behind.

How does a SEPA bank transfer work?

There are three ways to transfer money with SEPA: by SEPA Credit Transfer, SEPA Instant Credit Transfer, and SEPA Direct Debit Transfer. All three offer unique services that are different from each other. 

For example, SEPA Credit Transfer requires the account holder to provide the recipient’s bank information, while SEPA Instant Credit Transfer allows instant transfers without account holder account information.

SEPA Credit Transfer

The SEPA Credit Transfer, or SEPA-CT, uses the IBAN (International Bank Account Number) and BIC (Business Identifier Code) of each bank to transfer money. This system transfers money between accounts within one business day, making it faster than other payment methods like checks or wire transfers.

Sepa Instant Credit Transfer

SEPA Instant Credit Transfer is a super-fast way to send money. Once you confirm the transfer, the money will be available in the recipient's account in less than 10 seconds. SEPA Instant Credit Transfers are faster than other banking procedures, and they do not involve any intermediaries in the process. Unlike other methods, SEPA Instant Credit Transfers are available 24/7, 365 days a year.

If you want to use SEPA Instant Credit Transfer, make sure both your bank and the recipient’s  bank are SEPA Instant members. If not, the transfer will be processed as a normal credit transfer and take a few days to go through.

SEPA Direct Debit Transfer

The SEPA Direct Debit Transfer is a system that is used for recurring payments, such as monthly rent or utility bills. The SEPA Direct Debit Transfer is different from the SEPA Credit Transfer and the SEPA Instant Credit Transfer. The SEPA Direct Debit Transfer operates differently from the other aforementioned SEPA transfers — in this case, the recipient of the money transfer is the one who requests it.

Your money at Intergiro

With the Intergiro app, you can easily send and receive money between business accounts with just a few taps on your phone. Some providers still charge high fees for incoming or outgoing SEPA transfers for businesses. The good news is that Intergiro offers three standard price packages with unlimited free inbound SEPA payments and a generous monthly allowance of outbound SEPA payments to suit your business needs. Intergiro is perfect for those with SEPA Instant Credit Transfers, and it helps you manage your finances with one simple and intuitive app.