Single Euro Payments Area

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Single Euro Payments Area
Official languages
Member states
 -  Total 4,854,382 km2 (7th)
1,874,287 sq mi
 -  Water (%) 3.24
 -  2011 census 516,881,997 (3rd)
 -  Density 106.5/km2
275.8/sq mi
GDP (PPP) estimate
 -  Total $11,465 billion (2012)[1]
 -  Per capita $34,583 (2012)[1]
Time zone UTC, CET, EET (UTC±0 to +2)
 -  Summer (DST) WEST, CEST, EEST (UTC+1 to +3)

The Single Euro Payments Area (SEPA) is a payment-integration initiative of the European Union for simplification of bank transfers denominated in euro. As of February 2014, SEPA consists of the 28 EU member states, the four members of the EFTA (Iceland, Liechtenstein, Norway and Switzerland), Monaco and San Marino.[2]


The project's aim is to improve the efficiency of cross-border payments and turn the fragmented national markets for euro payments into a single domestic one. SEPA will enable customers to make cashless euro payments to anyone located anywhere in the area, using a single bank account and a single set of payment instruments.[3]

The project includes the development of common financial instruments, standards, procedures, and infrastructure to enable economies of scale. This should, in turn, reduce the overall cost to the European economy of moving capital around the region (estimated as two to three percent of total GDP).[4]


There are two milestones in the establishment of SEPA:

  • Pan-European payment instruments for credit transfers began on 28 January 2008; direct debits and debit cards became available later
  • By the end of 2010, all present national payment infrastructures and payment processors were expected to be in full competition to increase efficiency through consolidation and economies of scale

For direct debits, the first milestone was missed due to a delay in the implementation of enabling legislation (the Payment Services Directive or PSD) in the European Parliament. Direct debits became available in November 2009, which put time pressure on the second milestone.[5]

The European Commission has established the legal foundation through the PSD. The commercial and technical frameworks for payment instruments were developed by the European Payments Council (EPC), made up of European banks. The EPC is committed to delivering three pan-European payment instruments:

  • Credit transfers: SCT – SEPA Credit Transfer
  • Direct debits: SDD – SEPA Direct Debit. Banks began offering this service on 2 November 2009.[6]
  • Cards: SEPA Cards Framework

To provide end-to-end straight through processing (STP) for SEPA-clearing, the EPC committed to delivering technical validation subsets of ISO 20022. Whereas bank-to-bank messages (pacs) are mandatory for use, customer-to-bank Payment Initialization (PAIN) message types are not; however, they are strongly recommended. Because there is room for interpretation, it is expected that several PAIN specifications will be published in SEPA countries.

Businesses, merchants, consumers and governments are also interested in the development of SEPA. The European Associations of Corporate Treasurers (EACT), TWIST, the European Central Bank, the European Commission, the European Payments Council, the European Automated Clearing House Association (EACHA), payments processors and pan-European banking associations – European Banking Federation (EBF), European Association of Co-operative Banks (EACB) and the European Savings Banks Group (ESBG) – are playing an active role in defining the services which SEPA will deliver.

Since January 2008, banks have been switching customers to the new payment instruments. By 2010, the majority were expected to be on the SEPA framework. As a result, banks throughout the SEPA area (not just the Eurozone) need to invest in technology with the capacity to support SEPA payment instruments.

SEPA clearance is based on the IBAN bank-account identification and the SWIFT-BIC bank identifier. Domestic transactions are routed by IBAN; earlier national-designation schemes will be abolished by February 2014, providing uniform access to the new payment instruments. By February 2016 consumers must drop BIC sorting information for SEPA transactions, since it will be derived from the IBAN for all banks in the SEPA area.

Multinational businesses and banks have the opportunity to consolidate their payment processing on common platforms across the Eurozone. They will benefit from the efficiency of choosing among competing suppliers, offering a range of solutions and operating across borders.

The introduction of SEPA should increase the intensity of competition among banks and corporates for customers across borders within Europe. For consumers and organisations SEPA should mean cheaper, more efficient and faster payment transfers when moving euros from one Eurozone country to another.


SEPA consists of 34 countries:[2]

All parts of a country are normally part of SEPA, whether or not the regions are part of the European Union. The following countries have dependent territories which are not part of SEPA:

A few countries (and areas) using the euro are not included: Andorra, Kosovo, Montenegro, the Sovereign Base Areas and the Vatican City State.[8]


There is a misconception that all credit transfers in the SEPA are free to the consumer,[citation needed] either by plan rules or national transposition of the Payments Services Directives. Banks and payment institutions still have the option of charging a credit-transfer fee of their choice if it is charged uniformly to all EEA participants, banks or payment institutions, domestic or foreign.[9] This is relevant for countries which do not use the euro; domestic transfers in euro by consumers are uncommon, and inflated fees might be charged.

In Regulation (EC) 924/2009, the European Parliament mandated that charges in respect of cross-border payments (of up to EUR 50,000) to other Member States shall be the same as the charges for corresponding national payments.[10][11] However, the EU Regulation does not apply to all SEPA countries; the most significant difference is the inclusion of Switzerland in SEPA but not the EU. The rule of the same price applies, even if the transaction is sent as an international transaction instead of a SEPA transaction (common before 2008, or if any involved bank does not support SEPA transactions).

Key dates[edit]

1957 Treaty of Rome creates the European Community
1992 Maastricht Treaty creates the euro
1999 Introduction of the euro as an electronic currency, including introduction of the RTGS system TARGET for large-value transfers
2000 Lisbon Strategy: Meeting creates European Financial Services Action Plan
2001 EC Regulation 2560/2001 harmonises fees for cross-border and domestic euro transactions
2002 Introduction of Euro banknotes and coins
2003 First pan-European ACH (PE-ACH) goes live; EC Regulation 2560/2001 comes into force for transactions up to €12,500
2006 EC Regulation 2560 cap increases Euro transactions up to €50,000
2008 SEPA pan-European payment instruments become operational (parallel to domestic instruments) on 28 January[12]
2009 Payment Services Directive (PSD) enacted in national laws by November
2010 SEPA payments become dominant form of electronic payments
2011 SEPA payments replace national payments in the Eurozone
2014 Initially, national credit transfer and direct debit procedures were to expire on 1 February. Payment service providers in the euro area would only be able to settle payments using SEPA procedures.[13]

In January 2014, the Commission adopted a proposal to give an extra transition period of six months during which payments which differ from the SEPA format can still be accepted so as to minimise any possible risk of disruption to payments for consumers and businesses. The proposal does not change the formal deadline for migration of 1 February 2014, but allows payments that differ from a SEPA format until 1 August 2014.[14]

2016 On 31 October 2016, payment service providers in non-euro countries will only be able to collect Euro-denominated payments using SEPA procedures. Non-Euro schemes, such as UK Direct Debit, will continue without change.[15]

Progress report[edit]

The official progress report was published in March 2013.[16] In October 2010, the European Central Bank published its seventh progress report on SEPA.[17] While acknowledging some progress since the last report, the ECB expressed disappointment at the volume of work remaining to bring the SEPA to fruition and requested banks, regulators, and the software industry to continue working. The European Central Bank regards SEPA as an essential element to advance the usability and maturity of the euro. SEPA went live in January 2008, but as of May 2012 only 28.2 percent of credit transfers within Europe were executed in accordance with SEPA standards.[citation needed]

See also[edit]


  1. ^ a b "5. Report for Selected Countries and Subjects". International Monetary Fund. 17 June 2011. Retrieved 10 July 2013. 
  2. ^ a b List of SEPA Scheme Countries - updated with San Marino
  3. ^ "Solution: SEPA, the single euro payments area". European Central Bank. Archived from the original on 20 March 2008. Retrieved 28 January 2008. 
  4. ^ "Agreement reached on cross-border banking". RTÉ News. 27 March 2007. Retrieved 28 January 2008. 
  5. ^ "Joint statement by the European Commission and the European Central Bank welcoming the European Parliament's adoption of the Payment Services Directive". Europa (web portal) (Press release). European Union. 24 April 2007. Archived from the original on 19 March 2011. Retrieved 26 April 2011. 
  6. ^ EUROPA – Press Releases – Single Euro Payments Area (SEPA): cross-border direct debits now a reality EUROPA (European Union), 3 November 2009; Retrieved 4 February 2011
  7. ^ "Erste & Steiermaerkische Bank joins SEPA Credit Transfer register". 2013-08-09. Retrieved 2013-11-10. 
  8. ^ a b "The Boundaries of SEPA-land". Skandinaviska Enskilda Banken. 9 April 2013. Retrieved 26 June 2013. [dead link]
  9. ^ Regulation (EC) No 2560/2001 of the European Parliament and the Council of the European Union EUR-Lex, 19 December 2001
  10. ^ Cross-border payments in euro: Regulation on equality of charges, European Commission European Commission, 19 September 2013
  11. ^ Regulation (EC) No 924/2009 of the European Parliament and of the Council of 16 September 2009 on cross-border payments in the Community and repealing Regulation (EC) No 2560/2001 EUR-Lex, 9 October 2009
  12. ^ "Single Euro Payments Area kicks in, EU – European Information on Financial Services". 28 January 2008. Retrieved 26 April 2011. 
  13. ^ "Standard payment procedures from 1 February 2014". Deutsche Bundesbank. 3 December 2012. Retrieved 30 May 2013. 
  14. ^ "Single Euro Payments Area (SEPA): Commission introduces an additional transition period of six months to ensure minimal disruption for consumers and businesses" (Press release). 9 January 2014. Retrieved 10 January 2014. 
  15. ^ "SEPA Implementation timeline". GoCardless. Retrieved 10 April 2014. 
  16. ^ "Quantitative indicators". European Central Bank. March 2013. Retrieved 26 May 2013. 
  17. ^ "Single Euro Payments Area Seventh Progress Report: Beyond Theory into Practice". European Central Bank. October 2010. Retrieved 26 May 2013. 

External links[edit]