What is SEPA?

The abbreviation of SEPA means the single euro payment area. It was created by the EU in order to harmonize the transfer process of cashless payments among euro countries. The SEPA architecture was designed as a convenient tool for European consumers, businesses, and government agents while making direct debit or credit payments. Besides, this system is governed by the European Commission.

History of SEPA

It was the year 1999 when the story of SEPA began. At that time the banking industry already considered a need of having a single payments area since it would lead to further integration of EU economies. Yet only in 2007, the EU passed the Payment Services Directive that offered the legal basis for SEPA. As the SEPA architecture was progressing, in 2011 it replaced national payments and in 2017 allowed banks to transfer 15000 euros in a record time of ten seconds.

Starting from 2018, the European Commission made a proposal of stopping the extra cross-border charges for non-EU states. In addition, the proposal contains the rule that everyone in the EU can transfer euros for the same price as with their domestic transfer. Also, the new condition came: consumers must be informed about the cost of a currency conversion before paying abroad.

SEPA’s members and goals

The main goal of this system is to make foreign electronic payments as cheap and smooth as internal transfers. Moreover, the single euro payments area brings competition to the industry of payments: it creates a single market and brings the prices down. According to statistics, SEPA covers the area where more than 520 million people live, and those people process more than 122 billion e-payments annually. As of 2021, the area includes 36 countries. In fact, it does not only cover the EU member states but also San Marino, Monaco, Liechtenstein, Switzerland, Vatican City, Norway, and Iceland.

The managing regulators of SEPA are the European Commission and the European Central Bank. Together their task is to govern the board and to process the agenda together with government and consumer groups.

Are you looking for a SEPA solution for your financial company? Do not hesitate to contact the COREDO office to get more details.