A Comprehensive Guide to SEPA Payments 2024

European citizens had waited for just a bit more than half a century to get a unified payment initiative. 

Ever since 1957, and the foundation of the European Coal and Steel Community (ECSC), the European economic market had been striving to enjoy secure yet flexible payment conditions. 

That day came on 28 January 2008, when the SEPA Credit Transfer service was launched

This was the beginning of a new era of digital transactions in the European Economic Area (EEA).

In this guide, you’ll find out more about the nature, types, and application of SEPA payments. 

SEPA Definition and Development

The SEPA acronym stands for the Single Euro Payment Area. SEPA is a payment initiative brought in 2008 by the European Union and supervised by the European Payments Council (EPC). When it came into effect in January 2008, it first regulated credit transfers. Then in 2009, its scope expanded to debit transfers, and in 2017, it included instant credit transfers. 

The launch and implementation of the SEPA framework has been coordinated and assisted by various financial institutions within the EU, the national governments of member states, and banks. The main purpose of this initiative is to provide certain standards for carrying out secure and timely digital transactions between business organizations and financial institutions. 

Before the foundation of SEPA, payment processing on the territory of Europe was less comfortable and more time-consuming than it is today. Indeed, unprecedented technological advancements have also enhanced the development of the European payment system since 2008. However, without the regulations defined within the SEPA rulebook, EU citizens wouldn’t enjoy such a smooth, safe, and frictionless payment environment. 

SEPA as the Technological and Business Facilitator

The introduction of SEPA meant that all the relevant financial institutions and ministries across the EU countries had to develop and adopt the same shared procedures and standards. Apart from legal and finance demands – that helped organizations understand and apply compliance requirements – this single payment network wouldn’t be feasible without important fintech systems, from secure payment gateways to encrypted communications and multi-factor authentication. 

The fast growth of all these features in the last decade and a half has paved the way for SEPA to lower the costs of digital transactions between countries and strengthen the connective tissue of the EU economy as a whole. 

SEPA Region Constituents

The SEPA Region consists of 36 countries: 27 EU member-states, plus the UK, Switzerland, Norway, Iceland, Monaco, Andorra, Lichtenstein, Vatican, and San Marino. Check out the interactive map on the European Central Bank Website and see which European countries aren’t members of the SEPA community. 

SEPA Payment Procedure

When a consumer wants to start a SEPA payment, they submit the payer’s bank account data (IBAN number), the payment sum, and an SDD mandate (consent for payment authorization). 

As the payer obtains the transaction request, they sign the mandate and confirm the payment in question for completion. 

Banks facilitating the transfer can charge transaction fees, given that they are carried out in the same way for all members of the EEA.

Let’s now dive into different types of SEPA payments.

Making a SEPA Payment – Four Different Types

We can divide SEPA bank payments into four different categories, based on the speed, manner, and purpose of money transfer. 

SEPA Direct Debit B2B Payments

Tailor-made and available only to businesses, SEPA direct debit B2B payments come with more stringent regulations than direct debit transfers. To be more precise, every payment needs to be authorized and confirmed by double-checking the payment data on the payee’s transaction request, making sure it’s the same as the one on the payer’s mandate. The payment facilitator must obtain both the sender’s and recipient’s consent before the clearance. 

An unverified transaction cannot be reversed.

SEPA Core Direct Debit

SEPA core direct debit payments are aimed at natural persons, not businesses. This type of SEPA payment is typically used for recurring payments. They are practical for this kind of transaction for the following reasons: once the payee requests a payment, the payer must authorize them to withdraw the money from their account. As the payer approves a mandate for that payment and future transfers, there’s no need to authorize every following payment. 

Unlike SEPA credit transfers, there’s no prescribed limit for core direct debit payments, even though the payee and payer can impose one. This is usually done to reduce the risk of errors and chargebacks

SEPA Credit Transfers

Commonly used for one-time payments, SEPA credit transfers require that both the money sender and recipient submit their IBAN code to the bank and sign an authorization consent. When the transaction has been authorized, the funds are transferred to the recipient’s account in one business day. 

There are two precious pieces of information regarding SEPA credit transfers. The first one is that senders have 13 months to reverse a SEPA credit transfer if the payment date or amount is incorrect. 

The second one is that the payment limit for SEPA credit transfers is EUR 999,999,999.99. 

SEPA Instant Credit Transfers

Payers and payees who need fast payment processing – as quick as 10 seconds – should opt for SEPA instant credit transfers. Within this kind of SEPA framework, there’s a direct routing between banks, so that the transfer can be carried out without any middlemen that would slow down the transfer time. 

There are some prerequisites and limitations for such transactions. For instance, both the sender’s and recipient’s bank must be registered and verified members of the SEPA Instant system. As SEPA instant credit transfers aren’t available in some countries, the participants in such transactions need to check with their banks if that’s possible in the first place. 

According to the SEPA agreement, the limit on a single SEPA instant credit transfer is EUR 100,000. 

SEPA Transfer Duration

Not all SEPA transfers can be completed within the same timeframe. As stated above, instant credit transfers are the fastest ones, as they’re carried out within ten seconds. 

It takes at least three business days to settle a direct debit B2B transaction, a minimum of two business days to complete a core direct debit transfer, and one business to for a credit transfer.  

The Pros and Cons of SEPA Payments

Having defined SEPA payments, explained their legal and fintech evolution, and analyzed the main types, let’s now go through the pros and cons of these transfers. 

Why Use SEPA Transactions

Natural persons making bank transfers via the SEPA framework enjoy the highest possible level of protection and convenience, at least for mainstream transfers.

Business entities, operating via SEPA direct debit or SEPA credit transfer, get the following takeaways:

  • Fast, secure, and legally regulated payments within the EEA region.
  • Handy options for manually adding and removing recurring payers from their lists.
  • Smooth processing of automated payments.

From eCommerce and subscription-based businesses to software development, companies throughout the EEA rely on SEPA payments for steady business growth.

Why Not Use SEPA Payments

Despite all the stated advantages of SEPA transfers, there are a few flies in the ointment. 

The first one is that this payment framework doesn’t inform the funds’ recipient whether the payer has enough money in the account to make the recurring payment, for instance. Hence, the payer may miss or intentionally skip the payment. 

The second one is those 13 months for a chargeback. Initially, the desire to protect customers has exposed merchants to an increased risk of friendly fraud – the customer might order a product and use it for a few months, then claim they hadn’t received it at all and claim a refund.  

TPP: Learn more about such situations from our article How to Protect Merchants from Friendly Fraud


The SEPA payment framework enhances business cooperation within the EU while covering all the relevant financial and legal bases. 

Both merchants and consumers rest assured that their assets are transferred quickly and securely within this initiative. 

In our business operations, we comply with SEPA standards and all other related procedures to ensure the best mediating services for our merchants.

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