# SEPA

> Single Euro Payments Area

The single euro payments area. Around forty countries, with common rules to transfer, debit and pay in EUR as if it were a single domestic market.

_Category: technique_

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## Definition

**SEPA** (_Single Euro Payments Area_) is the single euro payments area, covering more than 40 European countries.

In practice, since 2014–2016, a transfer from Paris to Berlin or a direct debit from Madrid to Lisbon works, technically and legally, like a domestic payment: same formats, same timing, same prices.

## The scope in practice

- **20 eurozone countries**: Germany, France, Italy, Spain, the Netherlands, Belgium, Ireland, Portugal, Austria, Finland, Greece, Slovakia, Slovenia, Malta, Cyprus, Luxembourg, Estonia, Latvia, Lithuania, Croatia.
- **7 non-eurozone EU countries**: Bulgaria, Czechia, Denmark, Hungary, Poland, Romania, Sweden.
- **3 non-EU EEA countries**: Norway, Iceland, Liechtenstein.
- About a dozen non-EEA jurisdictions added by the EPC: the United Kingdom, Switzerland, Monaco, San Marino, Andorra, the Vatican, and more recently Albania, Montenegro, North Macedonia, Moldova, Serbia.

Note: only EUR payments are SEPA, even in a non-eurozone country (a EUR transfer to a Swedish bank is SEPA).

## The 3 SEPA instruments

SEPA is not a product but a family of standardised instruments:

- **SCT** (_SEPA Credit Transfer_) — classic transfer in EUR, up to one business day.
- **SCT Inst** (_SEPA Instant Credit Transfer_) — instant transfer in under 10 seconds, 24/7.
- **SDD** (_SEPA Direct Debit_) — direct debit, in Core (consumers) and B2B (businesses) schemes.

Each is governed by a rulebook published by the EPC (_European Payments Council_).

## Why SEPA changed everything

Before SEPA, a Paris → Madrid transfer cost €20 to €50 and took 3 to 5 days. Today it is free or nearly so, in a few seconds with SCT Inst. This is what made possible:

- pan-European fintechs (Wise, Revolut, N26), built on SEPA for their low-cost model;
- PISPs (Fintecture, Trustly) capable of an instant merchant payment anywhere in Europe;
- cross-border subscriptions (Netflix, Spotify) collected via SDD, whether you are French or German.

## What SEPA is not

- **Not a payment system**: it is a standard; payments flow through clearing systems (STEP2 from EBA Clearing, CORE(FR) from STET, EBA RT1 for SCT Inst).
- **Not multi-currency**: SEPA means EUR only. USD or GBP go through other rails (SWIFT, CHAPS).
- **Not a regulator**: a framework self-regulated by the EPC, with regulation coming in parallel (EU, ECB, NCAs).
- **Not a consumer service**: nobody uses "SEPA" directly, but a transfer (SCT) or a direct debit (SDD) that happen to be SEPA.

## Governance: the EPC

The EPC (_European Payments Council_), based in Brussels, defines the SEPA rulebooks, updates them each year (in November) and arbitrates between players. It brings together the major banks and the national banking communities.

## In the PSD2 ecosystem

SEPA is the payment plumbing on which the whole PSD2/PSD3 ecosystem relies. When a PISP "initiates a transfer", it is almost always an SCT or an SCT Inst that goes out behind the scenes.

```mermaid
flowchart TB
    EPC["EPC\n(European Payments Council)\nDefines the rulebooks"]

    subgraph SEPA_INST["SEPA instruments"]
        SCT["SCT\nClassic transfer"]
        SCT_INST["SCT Inst\nInstant transfer"]
        SDD["SDD\nDirect debit"]
    end

    subgraph SYS["Clearing systems"]
        STEP2["STEP2 (EBA Clearing)"]
        CORE["CORE(FR) (STET)"]
        RT1["EBA RT1 (Inst)"]
    end

    subgraph ACTEURS["Users"]
        BANQUES["Banks (ASPSP)"]
        PISP["PISP\n(Fintecture, Trustly…)"]
        APPS["Consumer apps\n(Wise, Revolut, Lydia…)"]
    end

    EPC --> SCT
    EPC --> SCT_INST
    EPC --> SDD
    SCT --> STEP2
    SCT --> CORE
    SCT_INST --> RT1
    SDD --> STEP2
    BANQUES --> SCT
    PISP --> SCT
    PISP --> SCT_INST
    APPS --> SCT_INST
```

## Concrete examples

- **Transfer between friends**: with Lydia or Lyf, €20 sent to a friend goes out as an SCT Inst, executed in 2 to 8 seconds.
- **Merchant payment**: €60 at Decathlon via Fintecture — an SCT Inst credits the merchant before you leave the site.
- **Salary**: the payroll transferred on the 28th of the month goes out as a classic SCT, executed in D+1 business day, cheaper for the company.
- **Netflix subscription**: €13.49 collected each month via SDD Core, on a mandate signed electronically.
- **Limit to know**: SEPA = EUR only. To send CHF to Switzerland, you leave the scope (the SIC or SWIFT rail), generally more expensive and slower.
- **Cost for a PSP**: operating in SEPA requires joining a clearing system and complying with the EPC rulebook; BaaS providers (Treezor, Swan, Solaris) absorb this complexity for their clients.

## Sources

- [EPC List of SEPA Scheme Countries](https://www.europeanpaymentscouncil.eu/document-library/other/epc-list-sepa-scheme-countries) — European Payments Council
- [About SEPA](https://www.europeanpaymentscouncil.eu/about-sepa) — European Payments Council

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Source: https://openfinanceguide.com/en/glossary/sepa