EU E-commerce, Europe E-commerce

SEPA Bank Transfer: The 3 Types of SEPA

SEPA, shortened from Single Euro Payments Area, is a pan-European network that allows you to send and receive payments in euros between two bank accounts that are in the eurozone. What this means is that it was never easier to send or receive funds from one Eurozone country to another one; it is as simple as making payments through two domestic banks. SEPA bank transfer was discovered in 2014 when making cross-border payments became extremely simple and user-friendly.

 

There are 36 countries that are currently members of SEPA. These include:

  • The 27 countries of the European Union,
  • 4 countries that are from the European Free Trade Association (Liechtenstein, Norway, Iceland and Switzerland),
  • 4 microstates that have special monetary arrangements with the European Union (Vatican City, San Marino, Monaco and Andorra)
  • The United Kingdom which is not a member of the EU anymore but will continue to be a member of SEPA

 

The 3 Types of SEPA

When it comes to SEPA, it is very important to differentiate three different types of SEPA bank transfers. Each one offers a distinct service:

  1. SEPA Credit Transfer uses the IBAN (International Bank Account Number) and sometimes the BIC (Business Identifier Code) numbers in order to move money from one account to the other. The receiver should receive the money within one business day after the payment was made. 
  2. SEPA Instant Credit Transfer, also known as the SEPA Instant Payment, has existed since 2017 and the money is moved from one account to the other in a matter of seconds. SEPA Instant Payment doesn’t involve any intermediaries in the process, which is an incredible benefit. However, in order to use the SEPA Instant Credit Transfer, both banks (the sender’s and the receiver’s) should be registered as SEPA Instant members.
  3. SEPA Direct Debit Transfer is an option that many use for recurring payments. These include the monthly rent, any internet bills or subscriptions. This means that if there is something that you are supposed to pay at the beginning of each month, SEPA Direct Debit Transfer is a great option to use in order to make sure the payment is made. SEPA Direct Debit also requires the IBAN and sometimes the BIC. There is a significant difference between SEPA Direct Debit and SEPA Credit Transfer though. In this case, the roles are reversed, meaning that the receiver is the one who is initiating the money transfer. Here, the receiver of the money (e.g. the magazine you are subscribed to) sends a request to the sender to ask them if they can withdraw money from their account. Before the money is transferred, the sender has to sign a “mandate” – a contract that will allow the receiver to withdraw money from the sender’s account every month. SEPA Direct Debit Transfer is an incredible solution if you want your bill payments or subscription fees to be automatically taken out from your account. There are also two types of SEPA DDT: SEPA Core Direct Debit Transfer (which is available to all individuals) and SEPA B2B DDT (which is available only between businesses and companies).

If you want to know more about SEPA bank transfer or how to add SEPA as a payment option on your website, make sure to contact us and we will gladly help you out!