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What is the Single Euro Payments Area (SEPA)?

Welcome to Learn, where we provide straightforward, easy-to-understand definitions of the payments industry.

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The Single Euro Payments Area (SEPA) is a system of payment schemas that standardizes cashless transactions in euros. This local EU payment rail provides the same procedure for making both national and international payments.

For consumers, businesses, and financial institutions throughout the eurozone, SEPA enables cross-border money movement with the ease and efficiency of domestic payments.

How does SEPA work?

As the official currency of the European Union (EU), the euro plays a primary role in international finance. To streamline euro payments and promote economic vibrancy in the EU and beyond, SEPA provides consistent legal standards and technical rules—called payment schemas—for every euro transaction.

Each SEPA payment schema consists of three parts: a rulebook with business and technical obligations, implementation guidelines for translating SEPA transactions into ISO 20022 files, and SEPA Payment schema Management Rules. Currently, SEPA has payment schemas for credit transfers, card payments, and direct debit payments. A schema for mobile payments is also being drafted. These uniform standards for national and international bank transfers and payments simplify euro transactions and stimulate international spending.

Which Countries are Single Euro Payments Area Members?

Today, 36 countries can participate in SEPA payments—including countries in the European Union and select non-EU countries like Norway, Iceland, and Switzerland. Throughout these SEPA countries, financial institutions, consumers, and businesses can send and receive electronic payment orders within one business day and paper-based orders within two business days.

What are the Origins of SEPA?

Several European financial institutions and government agencies played a part in SEPA’s development—from outlining payment schemas to guiding its legal framework and governance. This development arose out of a movement to create a collaborative, liquid European financial market that began with the introduction of the euro.

Backed by the European Payments Council (EPC), Europe’s payment and banking industry first initiated the creation of the SEPA. From there, the European Central Bank, European Commission, and Euro Retail Payments Board have all contributed to the system and continue to guide its development today.

With the goal of fostering international economic activity, these financial entities designed SEPA’s credit transfer schema in 2008, and direct debit schema in 2009. By 2014, all EU countries and territories could engage in SEPA payments, and by 2016, the system opened up to non-EU countries.

How does SEPA Accelerate Cross-Border Money Movement?

From country-specific laws and financial regulations to varied file formats, cross-border payments are often complicated. Translating one country’s domestic payment orders to another slows money movement and inhibits businesses and consumers from participating in international economies. Providing one set of payment guidelines for all euro transactions, SEPA reduces complexity and simplifies international payments.

With SEPA, consumers and companies can use domestic bank accounts to fund international buying and selling—whether engaging in business, studying abroad, or visiting another country. In addition, the SEPA framework guarantees that banks charge the same fees for domestic and international payments. With transparent pricing and unified payment rules, SEPA quickens the pace of money flows across 36 countries and promotes joint economic development.

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