SEPA

SEPA, or the Single Euro Payments Area, is an initiative to harmonize euro-denominated payments across participating European countries. It enables cross-border and domestic payments in euros to be treated as local payments, with the same rights, costs, and processing times.

The main SEPA instruments are the SEPA Credit Transfer (SCT) and the SEPA Direct Debit (SDD). A newer addition is SEPA Instant Credit Transfer (SCT Inst), which allows real-time euro transfers between participating banks. Payments are conducted using IBAN for account identification and BIC (SWIFT code) for bank identification, with standardized message formats to support interoperability.

Participation is open to EU member states and some other European countries and territories. The scheme is governed by the European Payments Council, composed of banks and payment service providers. The objective is to reduce friction and costs for euro payments and to create a truly integrated euro payments market across Europe.

Impact and status: SEPA aims to ensure that cross-border transfers are as easy and inexpensive as domestic transfers, simplify consumer rights for direct debit and credit transfers, and foster competition among payment service providers. It is a key component of the European Union's internal market and digital economy.