SEPA payments

The main aim behind the SEPA initiative is to improve cross-border payments made in Euro so that they became as simple and cheap as if you were making a local transfer. With this in mind, sending Euros from Germany to a Euro bank account in Greece should be exactly the same as sending the money to another German-based bank account.

Before the introduction of SEPA, transferring money or even paying for goods and services in another Euro country with a debit card sometimes took a long time, plus bank charges often meant that the recipient didn’t get the full amount.

First, all SEPA transfers must be made in Euros. If you need to send money in a different currency, then the SWIFT transfer process will be used. You can learn more about this in our SWIFT codes article. Second, only countries that have signed up to SEPA can offer this system. Currently, this is every member state of the European Union, the four countries in the European Free Trade Association (EFTA), namely Iceland, Lichtenstein, Norway, and Switzerland, plus the four microstates of Andorra, Monaco, San Marino, and Vatican City. In total, 36 countries have signed up to SEPA.

One of the fundamental aims of the SEPA regulations was to reduce the cost of money transfers. Banks and payment service providers cannot make a deduction from funds received by SEPA transfer, but they make a credit-transfer charge. The EU regulation states that the charge can only be the same charge the bank would make for a local transfer. So if they charge €5 to transfer between banks in the same country, then they can charge €5 for the SEPA transfer. It’s important to note that SEPA charges only apply to the actual transfer of the funds in Euros. If a currency conversion is required, that is a separate transaction.

SEPA payments are guaranteed to arrive within 48 hours, but the transaction may show in your account sooner than this. There is a daily cut-off time for normal banking days, but if the payment is received before this time, the payment will arrive the next day.

If you have used SEPA payments in the past, you may have been told about the €50,000 limit for transfers. This limit has been removed by updated regulations so that banks can only charge the same amount for large SEPA transfers as they would for a domestic transfer. It is advisable to check with your bank before starting a SEPA transfer of over €50,000, so that you know what the charges will be. Some banks are treating this as a SWIFT transfer and making quite large charges. For larger transfers, it may be worth making several payments of €50,000 instead of a single large transfer.

Arranging a SEPA payment with your bank is very easy. Either in person or online. The main difference between a SEPA transfer and a transfer within the same country is that you must use the recipient’s International Bank Account Number (IBAN). If by mistake you use the account number and SWIFT code instead, the bank may refuse to process the transfer or use the more expensive SWIFT transfer process. Once you have started the SEPA transfer with your bank, your recipient is guaranteed to receive the funds in full, with no deductions, and within 48 hours. Paying on time is important for a business, and Qonto can help. You can download confirmation of your SEPA transaction and send it to your business partner to show that the funds are on the way.

In the current climate, we can’t talk about SEPA and not mention Brexit. There are two scenarios. First, the UK leaves with some form of trade agreement that continues the countries alignment with SEPA. Second, the UK diverges from EU regulations and SEPA cannot be used to send Euros to the UK. At the time of writing it is still unclear which way the UK is heading, but it would benefit both sides to make an agreement and continue using SEPA.