SEPA Transfers Explained: The Magic behind Euro Bank Payments

What is a SEPA bank transfer?

SEPA or Single European Payment Area is a major achievement in harmonizing payments in the old continent. Institutions in Europe took a great leap with the initiative to enable businesses and people to receive fast, domestic-like, cross-border transfers easily. 

The SEPA payment network (or payment scheme) was officially introduced in February 2014, replacing domestic euro payment methods in all participating countries.

What is SEPA payment method?

SEPA as a payment method between bank accounts is a new format that enables bank account holders to make transfers in Euro currency – direct debits and credit transfers. 

It was built around predefined conditions and rules that allow people to rely on a secure, standardized and fast way to send and receive payments in Euro. 

To send a SEPA credit transfer, you only need to know the names and IBAN number (International Bank Account Number) of the receiver.

What is the end result?

Consumers got peace of mind by having access to easier payments. This resulted in more convenient access to the huge European market and improved opportunities for large and small businesses.

How does a SEPA transfer work?

In this section, we will outline what are the different types of SEPA payments and what is the process for initiating:

In this section, we will outline what are the different types of SEPA payments and what is the process for initiating:

• SEPA Credit Transfer
  
  SEPA Credit Transfer, or SCT, is an e-payment in Euro from a bank account to another one in the network. By 2020, SEPA has become the preferred way to pay across Europe.

  SEPA transfers are manually executed either by the bank employee that you visit or by yourself – via your online banking or a digital wallet app.
  

• SEPA Direct Debit
  
  SEPA Direct Debit is a pre-authorized, recurring payment that automatically gets deducted from the payee account at pre-defined intervals. People opt for direct debits when they have to pay fixed or non-fixed expenses, such as utility bills, rent, ongoing services, etc. Direct debits are very convenient because they help you mitigate the risks of missing a payment deadline, such as late fees.

  But how exactly do Direct Debits work? The creditor (e.g. your water company) sends instructions via their financial institution or bank over the SEPA network, along with the proof and details of the direct debit payment, to the payer. Then the payer signs the mandate, which allows the company to automatically collect the amount from the account on a pre-agreed date.

  

• SEPA Instant

  SEPA instant or SCT Inst. is a pan-European credit transfer system that is capable of delivering bank transfers, in Euro only, within 10 seconds. We’ve covered everything you need to know about SEPA Instant in another useful post.

How much does a SEPA transfer cost? Is SEPA free?

EU regulations stipulate that transferring money between bank accounts in different SEPA countries should not cost more than a domestic transfer. However, some banks, mostly in Italy, Spain and Bulgaria, are still able to offset the reduced SEPA costs by charging you extra for incoming transfers. For this reason, you should be aware of your financial institution’s tariffs. 

At iCard, you get free IBAN accounts in 6 different currencies, zero monthly fees and zero fees for incoming transfers. Additionally, you can send a SEPA transfer for 1.00 EUR flat fee, from your phone.

How long does a SEPA transfer take?

Many of our users ask:

Are SEPA payments same day? How fast are SEPA transfers?

The normal timeframe for settling a SEPA transfer is 1-2 business days. In most cases, the money arrives in the beneficiary account the next business day. 

It’s not uncommon that the money will arrive on the same day, especially if you order the transfer early in the day – before 10 o’clock. Simply put, different banks and financial institutions have different procedures for processing SEPA transfers – 1, 2, 3 or more times per day. 

You just need to have the recipient’s IBAN and names ready before sending.

Which are the SEPA zone countries?

The SEPA payment network was created for all countries that primarily use Euro, or are pegged to it. The list includes a total of 44 countries and autonomous territories.

There are 27 European Union countries:

Austria

Belgium

Bulgaria

Croatia

Cyprus

Czech Republic

Denmark

Estonia

Finland

France

Germany

Greece

Hungary

Ireland

Italy

Latvia

Lithuania

Luxembourg

Malta

Netherlands

Poland

Portugal

Romania

Slovakia

Slovenia

Spain

Sweden

And these countries, territories and autonomous regions:

Aland Islands (Finland)

Azores (Portugal)

Iceland

Lichtenstein

Monaco

Norway

Madeira (Portugal)

San Marino

Canary Islands (Spain)

Switzerland

United Kingdom

Gibraltar (UK)

Guernsey (UK)

Jersey (UK)

Isle of Man (UK)

Vatican City

Andorra

You may check the up-to-date official list at the European Payments Council here.

Are SEPA transfers safe?

Yes, absolutely – they have become the preferred way to send Euros in Europe! 

However, as SEPA depends on human input, errors are not impossible. 

Did your SEPA transfer get lost or the sender told you they never got the money? 

You have a way of finding out and it’s called SEPA investigation. We have explained how investigations work for both SEPA and SWIFT transfers here. 

Do you need to cancel a SEPA transfer?
As a sender, you have the option to request a SEPA payment cancellation by contacting your financial institution. You have up to 13 months to start the process and you should specify a reason. Your account provider will handle your request and re-route it to the beneficiary bank. The last step is for the recipient to decide whether they will return the money or not.

What is the difference between SEPA and SWIFT?

You may want to have a look at this previously explored topic in a separate blog post outlining behind-the-scene mechanics of both SEPA and SWIFT transfers.

Here is the summary:

SWIFT vs SEPA

Pre-requisites for sending SEPA and SWIFT transfers

Having a free standard account is a pre-requisite for sending SEPA and SWIFT transfers with iCard on your phone. All you need is to download the app and verify your identity online. 

Enter the IBAN you want to send money to and we will automatically select the best type of transfer for you, quoting the precise SWIFT transfer fee or a 1.00 EUR fee for SEPA.

How to make a SEPA payment?

It is easy and takes just a few taps to make a transfer using any of your iCard IBAN accounts. 

All you need is the IBAN and names of the beneficiary. 

See how it’s done in seconds:

If you want to learn more about the different debit cards, virtual cards, instant transfers and much more, simply visit iCard.com or find us in Google Play or the App Store.

Send bank transfers via your phone!
Download iCard now: