In the Money Moves series, we’ll unpack the basics of different payment schemes across Europe and the UK, explore their advantages and disadvantages and see how merchants can benefit from them. In this article, we’ll focus on the most popular SEPA payment methods: SEPA Credit Transfer and SEPA Instant.
What is SEPA?
Single Euro Payments Area (SEPA) is a network that allows merchants to send and receive payments in EURO between two cross-border bank accounts. SEPA operates in 36 member states across the European Union, as well as a number of non-EU countries.
What is SEPA Credit Transfer?
SEPA Credit Transfer uses International Bank Account Number (IBAN) and Bank Identifier Code (BIC) numbers to send funds from one bank account to another. SEPA clearing rules require that payments made before the cutoff point on a working day be credited to the recipient's account by the next working day.
What is SEPA Credit Instant?
SEPA Credit Instant provides near-instant payments from the sender’s bank to the recipient’s bank, without involving intermediaries in the process. SEPA Instant Credit Transfers are available 24/7, 365 days a year.
What countries does SEPA operate in?
In total, SEPA operates in 36 countries, including:
- European Union member states: Austria, Belgium, Bulgaria, Croatia, Republic of Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, and Sweden.
- European Free Trade Association (EFTA) member states: Iceland, Liechtenstein, Norway, and Switzerland.
It is worth noting that some territories or dependencies of SEPA countries may not be included in the SEPA scheme.
What are the main differences between SEPA credit and SEPA instant?
- SEPA Credit Transfers:
- Maximum transfer limit of €999,999,999.99
- Settlement takes one business day
- SEPA Instant Credit Transfers:
- Maximum transfer limit up to €100,000 at a time
- Settlement takes less than ten seconds
Benefits of SEPA Payments
SEPA payments offer several benefits over traditional cross-border payment methods. These benefits include:
- Speed: SEPA payments are processed much faster than traditional cross-border payments, taking only a few hours to complete. This makes SEPA a popular option for businesses and individuals who need to make payments quickly.
- Cost-effective: SEPA payments are much cheaper than traditional cross-border payments, making them a cost-effective option for businesses and individuals.
- Security: SEPA payments are highly secure, as they use advanced encryption technologies to protect sensitive information. This helps to reduce the risk of fraud and other security breaches.
- Convenience: SEPA payments are convenient to use, as they can be initiated from anywhere in Europe, without the need for additional paperwork or visits to a bank.
Drawbacks of SEPA Payments
While SEPA payments offer several benefits, there are also a few drawbacks that should be considered. Some of the most significant drawbacks include:
- Limited Availability: SEPA payments are only available within the eurozone, so they cannot be used for cross-border transactions outside of Europe.
- Complex Process: SEPA payments can be complex to set up, as there are many rules and regulations that must be followed. This can make it challenging for businesses that are new to SEPA to get started.
- Lack of Flexibility: SEPA payments are inflexible, as they must be initiated through a bank or financial institution. This can limit the options available to businesses that need to make payments quickly and easily.
SEPA Payments for merchants
Access to major payment schemes around Europe is vital to any business to facilitate everyday business activities. Nevertheless, accessing reliable, secure and fast banking infrastructure can be challenging due to the outdated technology stack used by most traditional providers.
With BVNKs Virtual Accounts you can:
- Access SEPA Credit Transfer and SEPA Credit Instant payment schemes
- Receive and send payments in both crypto and fiat (EUR, GBP)
- Set up dedicated accounts with sort codes for UK payments and vIBANs for EU accounts
- Access global payments across multiple fiat, cryptocurrencies and stablecoins
- Pay suppliers, contractors, and other third parties
- Get additional capabilities of crypto processing, cross-border and embedded payments