What is the Single Euro Payments Area (SEPA)?

Introduction to SEPA

The Single Euro Payments Area (SEPA) is a European Union (EU) initiative designed to standardize cashless, euro-denominated payments within and among EU member countries. Prior to SEPA, EU member countries operated separate systems, causing higher complexity and costs for cross-border payments.

There are four main SEPA payment schemes. SEPA Credit Transfer was introduced first in 2008, followed by SEPA Direct Debit Core and SEPA Direct Debit B2B in 2009. Instant payments within the SEPA zone became possible with the launch of SEPA Instant Credit Transfer in 2017.

In 2021, SEPA payment schemes accounted for over 95% of all bank payments in the EU. SEPA payment schemes facilitate approximately 46 billion transactions in 36 countries each year. We have previously published an in-depth guide to SEPA payments, in case you want to dive deeper on the topic.

‍

What is the Single Euro Payments Area?

There are 36 countries in the SEPA zone, including all EU member states plus some non-EU member states.

As of 2024, the SEPA member countries are: Austria, Belgium, Bulgaria, Cyprus, Croatia, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Republic of Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovenia, Slovakia, Spain, and Sweden, along with non-EU members Iceland, Norway, Liechtenstein, Switzerland, Andorra, Vatican City, Monaco, San Marino, and the UK.

SEPA members aren’t required to be in the EU. The UK, Switzerland, Norway, and Iceland are SEPA members despite not being EU member states. Several EU member states and SEPA members do not use the euro as their national currency, including Denmark and Sweden.

‍

What is an IBAN?

An important feature of SEPA is that it uses the International Bank Account Number (IBAN) standard to normalize account numbers across the SEPA zone.

An IBAN consists of up to 34 alphanumeric characters with the length varying by country. The IBAN format is defined by the ISO 13616 standard. IBANs always start with a two-letter country code, followed by two check digits, and end with the basic bank account number (BBAN). The BBAN itself consists of the bank identifier code (BIC) followed by the account number.

The structure of an IBAN in the SEPA zone is always consistent regardless of the number of characters in the IBAN.

SEPA payment methods

There are four key SEPA payment methods that facilitate both credit transfers and direct debits. You can find a detailed exploration of each scheme in our SEPA payments guide.

SEPA Credit Transfer

SEPA Credit Transfer (SCT) was the first SEPA scheme to be introduced in 2008. SEPA Credit Transfers are funds transfers between PSPs that both have IBAN codes. These transfers are conducted in euros and are used widely for consumer purchases throughout the SEPA zone. All banks and PSPs are required to support the scheme.

SEPA Instant Credit Transfer

Introduced in 2017, SEPA Instant Credit Transfer (SCT Inst) is intended to make instant payments available to everyone in Europe. SCT Inst payments are a kind of push payment, meaning they’re initiated by the debtor. SCT Inst can be used for peer-to-peer payments and invoice payments as with non-instant credit transfers, but their speed and availability also makes them suitable for ecommerce purchases, QR code payments, and request-to-pay.

SEPA Direct Debit Core

SEPA Direct Debit Core (SDD Core) is mostly used by businesses to collect recurring payments from customers such as subscriptions, rent, bills, loan repayments, and insurance premiums. The scheme can also be used to collect one-off payments. SDD Core enables pull payments, meaning that the creditor is given authorization to collect funds from the debtor’s account. This authorization takes the form of a mandate that outlines certain pre-agreed conditions.

SEPA Direct Debit B2B

SEPA Direct Debit B2B (SDD B2B) is used for transactions between businesses, including loan repayments or large purchases. SDD B2B is a pull payment method, meaning that the creditor is given approval to collect funds from the debtor’s account. This typically takes place on a recurring basis but the scheme can also be used to collect one-off payments. SDD B2B is used only for business-to-business transactions.