Back to glossary

What is a single euro payments area (SEPA)?

Table of contents

SEPA, or the Single Euro Payments Area has the primary goal of improving cross-border payments. It simplifies bank transfers, and allows customers to make cashless Euro payments to and from certain regions with the same ease as they can within their own country.

Which countries are included in SEPA?

As of 2023, there are 36 members of SEPA, including the 27 EU member states, the 3 EEA countries – Norway, Liechtenstein and Iceland, plus Switzerland, San Marino, Monaco, and the United Kingdom.

How does SEPA work?

SEPA functions as a borderless system, where payments can be made based on common rules and standards. A paperless SEPA transfer in Euros takes between one and two working days, while transfers in foreign currencies can take up to four working days. If you have the receiver’s bank information, businesses or individuals can make a SEPA transfer using their online banking, in-branch at their local bank, or by using a payment service provider.

There are four major Euro payment schemes:

Credit transfer: An electronic payment from one account to another. These can be one-off payments, or recurring, and they can be single payments or bulk payments. Using an IBAN number, the payment service providers can validate and process the transaction within one business day. There are no deductions from SEPA.

Direct Debit (Core): This scheme allows consumers to automate their recurring transactions, reducing the risk of missing any payments and incurring penalties. They are a secure method of sending money, and consumers can request a refund within 8 weeks, even for an authorized payment. This scheme is aimed at consumers, not businesses.

Business to Business: For business use, Business to Business is SEPAs Direct Debit choice. The payer must be a business customer, although the biller can be a private individual. The payment will be considered final after 3 business days, and the payer is not entitled to the same refund protection as they are for Core transactions.

Instant Credit Transfer: Under the Instant Credit Transfer scheme, funds can be available in as little as 10 seconds, and up to 100,000 Euros. This service is aimed at reducing the friction of cheques and cash, and is available 24/7/365. It is currently not available for all SEPA countries, but the goal is to gradually expand its reach.

When can you use a SEPA payment transfer?

SEPA offers convenience and efficiency when making payments within the 36 regions covered, allowing transfers to be made as quickly and cost-effectively as they could within a business’ own country. As SEPA continues to add functionality for payment harmonization and cost-effective transfers, it is a powerful tool for any company working inside the EU or with overseas customers and employees. Processing payroll payments with SEPA can be one of the solutions for global companies that have European employees.

Lady in green Lady in green

Benefits of unified payroll payments

Free report: how Papaya streamlines the complexities of global workforce payments

Download Here