The Single Euro Payments Area (SEPA) is a European Union integration initiative in the area of payments. SEPA (Single Euro Payments Area) is the place where citizens, companies and other economic operators can make payments in Euros, within Europe, either within or out of their national borders, with the same terms, rights and liabilities, regardless of the geographical area in which they are located. The geographical scope of SEPA covers the 27 Member States of the European Union, as well as Iceland, Liechtenstein, Norway, Switzerland and Monaco.
SEPA payments are always Euro payments. The accounts may be in Euro or in another currency. SEPA payment tools are also expected to replace the national payment tools currently used in Euro zone Member States.
Under SEPA, consumers can make payments by credit transfer (direct transfer), direct debit (standing order) or by credit or debit card, in Euro between 32 countries, while benefiting from highly competitive value-added services provided by banks. The difference between a “traditional” credit transfer and a SEPA credit transfer is this: to do the latter, one has to name the IBAN (International Bank Account Number) and, where necessary, the BIC (Bank Identifier Code) of the party receiving the payment. In addition, SEPA enables consumers to register and make multiple payments, inside and outside of their bank, regardless of the amount or the transaction, by using an electronic file. SEPA remittance limit is amounts in Euros over 50.000, in contrast to the simple remittance. At the same time, natural persons can make an instant payment by choosing high or non-priority, while legal entities are given the opportunity to create a payment file (“eppssepa”) and an approval process is required from the bank for their execution.
The main purpose of SEPA is to facilitate domestic and non-domestic trade, under the same conditions and rights regardless of the geographical area. Each part of the transaction, i.e. the consumer paying a bill on the one hand, and the biller receiving the payment on the other, will be charged individually and separately by their bank for this payment service in a fully transparent manner. The amount of charges for making a SEPA direct debit is determined solely by the credit institutions, based on their general pricing policy or based on specific pricing with their customer (natural or legal person). Beneficiaries of a SEPA payment, for example businesses and public services, should indicate their IBAN and BIC in prominent places on their websites and invoices, in accordance with Article 4 (4) of the Regulation (EC) 924/2009 regarding cross-border payments in the Community. It should be noted that for the use of IBAN and BIC, instructions are provided by the banks, through their websites or through relevant leaflets available in their branch network.
In conclusion, SEPA was created with the aim of developing a unified European market. The benefits for consumers include ease of use, automated process, uniform format of technical rules while, at the same time, combines security and speed in the payment process without a maximum amount of transactions.