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SEPA Transfers Explained

    What is SEPA?

    SEPA stands for Single European Payments Area and marks a major milestone in the harmonisation of the European payments landscape. The SEPA payment initiative was driven by the European institutions with a single goal – to enable people and businesses to send and receive cross-border transfers in euro as easily and rapidly as domestic transfers.

    The scheme was officially introduced on 1 February 2014, replacing all domestic euro schemes throughout Europe.

     

    What is a SEPA transfer?

    SEPA enables individuals and businesses to make euro transfers (direct debits and credit transfers) to the SEPA-participating country using a single bank account (IBAN) and a standard set of rules and conditions. This allows people to rely on a fast, secure and standardised way to make and receive euro payments.

    The bottom line?

    Peace of mind and convenience for consumers; easier access to the European market and better business opportunities for companies.

    How long does a SEPA transfer take?

    Usually, SEPA transfers take 1-2 business days to arrive in the beneficiary’s bank account. In most cases, the money appears the next business day.

     

    Which countries and territories are part of SEPA?

    Currently, the geographical scope of the SEPA scheme includes 34 countries and territories: the 28 EU Member States plus Iceland, Norway, Liechtenstein, Switzerland, Monaco and San Marinо. You can find the full list here.

     

    SEPA payment schemes

    • SEPA Credit Transfer
    • SEPA Credit transfer (SCT) is an electronic payment in euro from one bank account to another. SCT has become a common way to pay across Europe and may be one-off or recurring payment (also known as a standing order). According to the European Payments Council every year people make over 19 billion SEPA transfers.

    • SEPA Direct Debit
    • SEPA Direct Debit is a type of pre-authorized, automatic payments. People can use Direct Debits to pay fixed expenses, such as rent, utility bills, etc. Direct Debits eliminate the risk of missing a payment deadline and late payments fees, which makes them very convenient for both consumers and businesses.

    But how do Direct Debits work? In a nutshell, the creditor (for example, the power company) sends a mandate (a document with all required details for the direct debit payment) to the payer. The payer signs the mandate and the power company automatically collects the amount from his account on the agreed date.

     

    What is the difference between SEPA and SWIFT?

    Before taking a closer look at the differences between the two payments schemes, let’s shed some light on SWIFT.

    SWIFT stands for Society of Worldwide Interbank Financial Telecommunication. In other words, this is the global messaging network that banks and financial institutions use to transmit information, including payments instructions for international wire transfers.

     

    SEPA vs. SWIFT

    Currency

    SEPA transfers are made in euro only. SWIFT transfers can be made in most currencies.

    Coverage

    SEPA transfers can be made only within the SEPA-participating countries. SWIFT transfers can be made to almost any country in the world as long as the receiver’s bank is a member of SWIFT.

    Timeframe

    It takes 1-2 business days for SEPA transfers to arrive in the beneficiary’s account. SWIFT transfers usually take a little longer and the transfer reaches the account in 3-5 business days.

    Charges

    SEPA transfers are usually cheaper than SWIFT transfers. The latter cost more, because the money goes through multiple intermediary banks which add their own fees.

     

    Requisites necessary for SWIFT and SEPA transfers

    When making a SEPA transfer, you need only the name of the receiver and their IBAN. For SWIFT transfers, you need these two plus the SWIFT (also known as BIC) code of the receiver’s bank.

    LeoPay supports both SWIFT and SEPA transfers to and from your LeoPay account. When you send money to any bank account, we automatically select the best type of transfer for you.

     

    How to make SEPA payments from your LeoPay account?

    It’s easy and takes just a minute. All you need is the name and IBAN of the beneficiary. Then, follow these few simple steps:

    1. Log in to your LeoPay account
    2. Click on the Payment Assistant (the white search bar on the top)
    3. Enter IBAN, amount, beneficiary and confirm

    If you want to learn more about the different types of transfers that LeoPay offers, check out our Transfers page.