SEPA countries: what is SEPA, and which countries can make SEPA payments?

SEPA has revolutionized the way we do commerce in Europe and beyond. It has been a valuable initiative for businesses big and small, as well as individuals, bringing the world of online commerce together and simplifying payment methods.  SEP has also accelerated the rate at which transactions are made, while maintaining high standards of security.

In this blog post, we’ll discuss SEPA: its history, the the SEPA region countries involved, and the differences between SEPA and SWIFT payments.

SEPA stands for Single Euro Payments Area. It enables customers in the European Union, as well as a select number of other countries, to make credit transfer and direct debit payments safely and securely as they would be making payments within their own countries.

SEPA was first introduced in 2008 solely for credit transfers, before direct debits were introduced in 2009. 2014 saw full implementation of SEPA across the euro area, and in 2016 a number of non-EU countries were added.

Eliminating the boundaries which previously slowed euro-payments allowed for commerce to operate more smoothly across the continent. The governing bodies involved in implementing SEPA were the following:

• The European Commission
• The Eurosystem
• Other public authorities

In 2007, the Payment Services Directive was introduced to contribute to developing a single payments area in the European Union, which eventually became SEPA. It is ultimately a legislation that provided the legal foundation for a single payment market in the EU, ensuring safer, more efficient payments across borders within the SEPA zone.

In 2013, the European Commission put forward an amendment aiming to enhance the existing services provided by the PSD, hence PSD2. Among the features the amendment was intended to improve are:

• Consumer protection
• Competition and innovation
• Security in the payments market
• Infrastructure for new payment methods

As of 2022, these are the countries benefiting from the SEPA initiative.

Countries using EUR currency:

Countries in the SEPA zone using currency other than EUR:

SWIFT stands for the Society for Worldwide Interbank Financial Telecommunications and was introduced far earlier than SEPA: in the 1970s. SWIFT includes a larger list of countries than those in the SEPA zone. As of 2022 nearly every country in the world is connected to SWIFT.

Aside from these differences, SWIFT provides essentially the same service as SEPA, just on a wider scale. The idea behind the organization has been to make international transactions as simple to conduct as domestic ones.

What’s required for transactions to go through with SWIFT is:

• IBAN
• BIC

These stand for International Bank Account Number and Bank Identifier Code respectively, and are required from the recipient of any transfer. With this information, the sending currency can be converted into the recipient’s currency. The arrival time of transfers depends on the country, but usually spans between 1 - 4 working days, which is much longer than a SEPA payment.

SEPA can be broken down into two different transaction types: SEPA credit transfers and SEPA direct debits. Understanding the difference between the two will clarify important differences when you’re choosing which type of payment to make.

SEPA credit transfers are one-off or recurring payments within the SEPA zone from one individual to another. So, making a credit transfer could either be purchasing a pair of shoes online, or setting up a recurring payment for your monthly rent.

Direct debits under the SEPA initiative are set up between customers and merchants. Once the customer has given their IBAN and account information, they then consent to regular payments automatically deducted from their account on an established date of each month, week, or whatever time frame is agreed upon. The notifications sent to the paying customer are delayed, and can appear 14 days after the payment is made.

Transfers across SEPA region countries function like regular domestic payments, so there is usually no cost attached. Some banks, however, will charge an extra fee for using SEPA services, however this is up to the banks to decide and has nothing to do with the EU’s SEPA initiative.

• SEPA stands for the Single Euro Payments Area, and was an initiative implemented by the European Union and other European organizations.
• The idea behind SEPA was to facilitate smoother transactions and encourage more competition in the EU.
• PSD2 is the latest update to the Payment Services Directive, which increases the security of transactions and caters for newer payment methods.
• Some SEPA zone countries use EUR as a currency, while others don’t.
• SWIFT is used by more countries and was designed to achieve the same things as SEPA on a broader scale.
• SEPA credit transfers are initiated by the sender, SEPA direct debits are agreed upon between sender and receiver.

https://www.ecb.europa.eu/paym/integration/retail/sepa/html/index.en.html

https://www.bbva.com/en/everything-need-know-psd2/