SEPA: The Ultimate Guide

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SEPA: The Ultimate Guide

Here you will find all the information you need to feel confident when making transactions with SEPA, one of the largest global payment systems.


If you’re dealing with money transfers to your relatives and friends or consider lowering the costs of sending and receiving funds from your business partners and clients, this article will give you all the information you’re looking for. In this comprehensive guide, you will find out more about SEPA and the ways you can use it for your benefit.

We made sure to answer the FAQ and cover various issues related to SEPA payments — the top transfer option that improves daily transactional operations for millions of people around the Single Euro Payment Area.

If you are not acquainted with SEPA payments, we suggest you study this guide carefully to learn the basics of how the system works. Should you be interested in specific questions, refer to the Table of Contents to find the section that will give you a comprehensive answer.

What is SEPA?

Most people use this transactional method every day and barely know anything about it. Single Euro Payments Area is a financial network of European countries. What brings them together is the shared legislative framework for sending and receiving EUR payments, which allows for rapid and cost-efficient money transfers among them.

What does SEPA stand for?

All across Europe, people use SEPA for different motivations. These include but are not limited to billing for the services or products, receiving salaries, pensions, and various regular payouts, sending money to friends and family, etc. Many businesses fully rely on these payments within Europe, as the systems help them satisfy their main needs: purchasing input items, buying and selling products, sending salaries to their employees, clearing money obligations with their partners and the list goes on.

Although certain banks may apply small commissions for the Single Euro Payments Area transactions, the system is completely free on a general scale. Moreover, as all payments are in Euro only, customers also save on exchange rates. Any given transfer that amounts to less than 50,000 EUR will only require a couple of hours to reach the beneficiary. However, the instant credit transfer option that takes 10 seconds at most, is being gradually integrated all over Europe.

Knowing what SEPA is and understanding the way it works will give you an advantage in the form of fast international payments that are convenient and cost-efficient. Sending money across borders is as simple and fast as doing so within one country.

The euro currency and its coverage

Euro has the status of national currency in nineteen countries of the Eurozone, as well as in nine other non-EU territories, including two states outside the European border. The word “Euro” derives from the continent’s Latin name and is pronounced in a universal manner, which simplifies cross-border trade.

Euro is the only currency in the SEPA system, as it doesn’t only cover the states that have adopted the Euro, but also the UK, Norway, Denmark, Poland, and others. Thanks to the open financial and customs borders, the majority of businesses in these countries conveniently trade and operate in Euro alongside the local currency.

SEPA countries

The thirty-six territories that support SEPA greatly boost the economic capacity of the region. At the moment of this article’s publication, SEPA zone consists of twenty-eight EU member-states: Germany, France, Estonia, Belgium, Spain, Denmark, Italy, Greece, Finland, Hungary, Austria, Slovenia, Ireland, Bulgaria, Malta, the Netherlands, Lithuania, Poland, Croatia, Portugal, Sweden, Cyprus, Latvia, Romania, the Czech Republic, Luxembourg, Slovakia, and the United Kingdom.

However, SEPA is not only about the EU countries. Such territories as Norway, Iceland, Liechtenstein, Switzerland, Andorra, San Marino, and Monaco, are also a part of the network.

Considering the population of the above-mentioned states, almost half a billion people reside in the SEPA area. In businesses terms, they generate more than 120 billion SEPA transactions each year, and the numbers are steadily growing.

This transactional method is the primary way of electronic money exchange in the EEU. All citizens and businesses residing or possessing bank accounts in the countries of the SEPA zone are able to enjoy Euro transactions of the same speed and convenience as in their own country.

SEPA and the UK

Despite the fact that Pound is the national currency of Great Britain, SEPA transfers are still available for its citizens.

Regardless of the possible post-Brexit scenarios, it is very likely that the UK will continue to be a member of SEPA, as the system is an excellent tool with no analogs for individuals and businesses. This payment method combines a perfect set of standards for improving the efficiency of cross-border transactions and merging separated local markets into one.

In Europe, any customer can transfer Euros to a UK bank account using the SEPA system. Moreover, such transactions won’t require currency exchange or any relevant commissions. Euro accounts in the UK come with IBANs that aren’t any different from other European ones.

A SEPA transfer can also be sometimes chosen to execute a banking transaction between the US and the United Kingdom, given that the American party has a Euro account opened in an EU banking institution.

In order to open a Euro current account, UK citizens and businesses only have to provide the very basic personal data, which falls under European requirements.

EUR currency account

Each banking account, where the funds are stored and transferred in EUR is a Euro bank account.

So why bother having one? Because Euro bank accounts allow you to transact without inquiring extra commissions and extensive waiting times.

You are free to open a Euro account anywhere beyond the Eurozone; the conditions will be quite similar as those relevant for the local currency in that jurisdiction. Most banks also offer very competitive fees for the conversion of local currency to Euro.

No matter what EU country we are speaking about, having an individual or business Euro account has become an essential tool for hassle-free international travels and smooth cross-border trade.

Although currency exchange is very simplified within Europe, it is best to open a Euro bank account in countries that use Euro as national currency.

SEPA Direct Debit vs SEPA Credit Transfer (CT)

Even though the two may sound quite similar, SEPA CT and Direct Debit are two different ways to send money and come with different requirements. Both support Euro, but the mechanism is distinct for each.

If it is a simple money transaction, which is issued by the sender himself and only requires the recipient’s IBAN, we are talking about the CT. It is most frequently used to make single payments for services or goods within the network. For instance, if a person living in Italy purchases an item from a supplier in the Netherlands, he uses SEPA Credit Transfer as a payment method. In most cases, the beneficiary receives payment in one business day after the transaction is executed.

Alternatively, SEPA Direct Debit is managed by the customer’s bank, credit union or another money institution, on his behalf. This process works under the conditions of a signed authorization.

Having an easy to use an option like the SEPA Credit Transfer on the other side, this may sound too complicated, however, sending a Direct Debit payment doesn’t require immediate personal approval of every transaction by the customer.

Most of the direct debit transfers are recurring payments of a certain amount that are executed every month or another set timeframe; they can also take the form of conditional cashless payments, like sending a particular amount to the beneficiary after the account balance hits an indicated threshold. Direct Debits are widely used to subscribe for services, pay debts or rent. Businesses heavily rely on this option, as lengthy contracts may include several predefined payments.

What is IBAN and BIC?

Within the SEPA system, all transactions require inserting an IBAN, or International Bank Account Number, which is a unique code that plays the role of an address to which the payment is sent. IBAN contains the bank identifier, the country code and the account number in the bank itself, so it is sufficient to execute most payments, especially credit transfers.

An IBAN contains the bank chain number or code, a two-digit country code, a checksum to ensure its integrity, and the account number in the financial institution itself. A usual IBAN looks like this:

DE89 3704 0044 0532 0130 00

Here, DE — is the code for Germany, 89 is the control number, calculated using all other digits, 3704 0044 is the code of the bank, as well as of the bank office the account was opened at, and 0532 0130 00 is the account number. Such a precise coding system minimizes the possibility of errors and ensures that every transaction reaches its recipient.

It is worth mentioning, that in different countries IBANs may contain extra letters together with digits, however, the length and overall appearance is generally identical.

Business Identifier Code, or BIC, is a unique shortcode for the identification of banks, their branches, credit unions, and other money institutions. For SEPA CT within the Eurozone, these are usually not needed, but sometimes a bank may require this information to issue Direct Debit payments.

A BIC contains four digits that stand for the bank code, a two-digit country code, and two to five digits (letters or numbers) that indicate the exact bank office if needed. Here’s an example:


Here, STUA is the designated code for Satchel, LT is the country code of Lithuania, and 21XXX is the company’s designation for the central office in Vilnius.


SWIFT is another cross-border wire transfer network, which is accessible from pretty much anywhere. Currently, over 10,000 banking institutions in 210 states are connected to SWIFT. The rules are practically identical, however, SWIFT transactions are executed in pretty much any currency. Businesses located in Europe can use SWIFT for their financial operations, but there are several key differences that make SEPA much more convenient for Euro payments.

Unlike SEPA, SWIFT is not free. Any bank is allowed to set and charge commissions, for both incoming and outgoing transactions. Not all financial institutions are connected to SWIFT without third parties, but instead use correspondent banks that act on their behalf, following mutual agreements. Thus, one simple transaction may sometimes be subject to fees from a couple of different institutions!

Another difference is transaction speed. While SEPA instant credit transfers only need ten seconds to be executed, some SWIFT transactions may take up to a few working days.

SWIFT supports any currency, and this is equally good and bad. Let’s say, the recipient and sender are operating two different currencies. In this case, the funds will be converted automatically using exchange rates that are not beneficial to the parties, along with institutional commissions.

SWIFT is a fundamental worldwide payment instrument that is, however, slowly giving up to SEPA transfers, as more and more businesses outside of Europe are opening Euro bank accounts to operate within the system.

SEPA Instant Credit Transfer

Since 2017, financial institutions in eight Eurozone countries started offering SEPA Instant Credit Transfers, also known as SCT Inst. Essentially, these are credit transactions that are usually processed in under 10 seconds, and under unusual circumstances – in up to 20 seconds.

SEPA Instant is a relevantly new big thing in the European Union’s financial ecosystem, which often allows to accelerate and maximize the turnovers of European businesses. Currently, SEPA Instant payments are executed in all states of the Eurozone.


As suggested by this guide, SEPA payments have various advantages, which makes it one of the most popular money transfer methods in Europe. Both individuals and businesses are continuing to increasingly integrate SEPA transfers into their daily operation.

At Satchel we are ready to become your trusted partner and guide in the world of fast and cost-efficient Euro transfers. Apply for a European bank account today, without leaving your home or office, and enjoy all the benefits of SEPA payments in just a couple of days!

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