SEPA vs SEPA Instant: which system better suits your business needs?


Single Euro Payments Area (SEPA) payments and SEPA Instant aren’t the same thing, and they surely don’t mean the same for your business or your everyday transfers.

As the world of payments and European banking keeps improving, consumers are ever more demanding as they expect faster services, and while SEPA is enough for many, SEPA Instant can really empower your business. So, read on to find out the differences between the two and which suits you and/or your business best.

What is the Single Euro Payments Area (SEPA)?
SEPA is an acronym for Single Euro Payments Area, and it refers to a transfer standard within both the European Union and other SEPA member countries.

SEPA arose as a collaborative project with the goal of bringing harmony to the way cashless EUR payments are made in the European continent.

It did so by allowing European businesses, public administrations, and consumers to both make and receive transactions like credit transfers, card payments, and direct debit payments under the same framework.

Since then, EUR cross-border electronic payments have become as easy as domestic ones.

The SEPA Zone: Which Countries are a Part of SEPA?

SEPA was created as a single system that removes friction in both domestic and cross-border bank transfers.

Accordingly, it allows for cross-border transactions via direct debit, meaning an account in one country can be directly used for services that are provided in a different SEPA country.

In turn, this allows for those who live in another SEPA country to use their home country accounts to easily pay their living expenses and bills, but also to receive their salaries.

It’s a fact that B2B transactions can be hampered by incompatibility in systems, unnecessary complexity, and fees. Each EU country had or was in the process of building its own cross-border system.

To quickly overcome this fragmented landscape, European institutions decided that something needed to be done as it would be too inefficient for people and businesses to operate under these conditions and deal with unnecessary friction in transfers.

This in turn led to the creation of SEPA, which was closely followed by SEPA Instant, the system which allows for both citizens and businesses to pay with convenience, transparency and at lightning speed across Europe.

Moreover, it brought more transparency to Europe in terms of pricing which in turn made cross-border payments in general become safer, cheaper, and faster.

List of SEPA Countries (Updated 2022 Version)

The list of EURO SEPA counties and their respective IBAN/BIC code is as follows:

  • Andorra (AD)
  • Austria (AT)
  • Belgium (BE)
  • Cyprus (CY)
  • Estonia (EE)
  • Finland (FI)
  • France (FR)
  • Germany (DE)
  • Gibraltar (GI)
  • Greece (GR)
  • Ireland (IE)
  • Italy (IT)
  • Latvia (LV)
  • Lithuania (LT)
  • Luxembourg (LU)
  • Malta (MT)
  • Monaco (MC)
  • Netherlands (NL)
  • Portugal (PT)
  • San Marino (SM)
  • Slovakia (SK)
  • Slovenia (SI)
  • Spain (ES)

As for non-EUR countries, the rule of thumb is that companies that wish to use SEPA will set themselves up with a Euro bank account as means of transferring money via SEPA freely.

SEPA countries whose currency isn’t EUR (Euro) are:

  • Bulgaria (BG / BGN)
  • Croatia (HR / HRK)
  • Czech Republic (CZ / CZK)
  • Denmark (DK / DKK)
  • Gibraltar (GI / GIP)
  • Hungary (HU / HUF)
  • Iceland (IS / ISK)
  • Liechtenstein (LI / CHF)
  • Norway (NO / NOK)
  • Poland (PL / PLN)
  • Romania (RO / RON)
  • Sweden (SE / SEK)
  • Switzerland (CH/CHF)
  • UK (GB/GBP)

Now that you know which countries operate with SEPA it’ll be easier to understand the way the system works, how convenient it is, and how these transfers have effectively lowered the costs of sending EUR across European borders.

What is the Legal Framework for SEPA?

The legal foundation for SEPA has been laid out in the Payment Services Directive 2007/64/EC.

In what concerns the rules for Euro area countries and arrangements for euro transfers in EUR for countries outside of it, further information can be found in SEPA Regulation (EU) No 260/2012.

The scheme rulebook from the European Payments Council can be found here.

What Exactly is a SEPA Payment?

SEPA payments are in essence money transfers which go from one SEPA country to another. The EUR payment is sent from one bank account to another through the pan-European network as easily as it would’ve been in a domestic bank transfer.

SEPA Transfers Made Easy – Everything You Need to Know

There are three types of SEPA transfers:

· SEPA Credit Transfer: which is often the main resource for one-off transfers. It requires the International Bank Account Number (IBAN) and occasionally the Business Identifier Code (BIC)

· SEPA Direct Debit Transfer: often the number one solution for recurring payments, it can be used in one of two ways:

o SEPA Core Direct Debit Transfer: for individuals, mandatory for all banks which adhere to the SEPA scheme

o SEPA B2B Direct Debit Transfer: a B2B solution

· SEPA Instant Credit Transfer: the instant way of transferring money. The banks which perform the transaction (sender and receiver) must be registered as SEPA Instant members

How Long Does Each SEPA Transfer Take?

The SEPA Credit transfer usually takes no longer than a business day. As for SEPA Direct Debit transfers, the Core Direct takes at least 2 business days whereas the B2B Direct will take at least three business days.

Lastly, SEPA Instant, as the names points out, will take less than 10 seconds which is why it has been gaining a lot of traction amongst business owners and individuals alike.

What is a SEPA Instant Payment?

SEPA Instant payments schemes, which may occasionally be referred to as SCT Inst or SEPA Instant Credit Transfers, are transfers in EUR which are done instantly and can reach their recipients around the clock and in seconds.

The system operates around the clock, 24 hours a day, 7 days a week, 365 days a year.

This new bank transfer tech makes it possible for EUR transactions to be processed in a matter of seconds and unlike many other payment systems, its speed is actually independent of the account provider’s underlying arrangements for payment, clearing, and settlement.

As such, if both parties involved in the transfer adhere to SEPA Instant, the transfer is done instantly.

How Does SEPA Instant Work?

To be able to execute SEPA Instant Payments, both the banks on the sender and receiving end must be part of and connected to the SEPA instant scheme.

SEPA instant has plans to expand to all its member country banks, meaning that 36 countries will have effectively seen no “geographical borders” in what concerns payments.

Differences Between SEPA Instant and Regular SEPA Payments

In what concerns transfer time SEPA instant’s speed is outmatched by conventional banking systems, as the name points out, does it in seconds (averaging out at around 10 seconds), while SEPA takes up to a working day.

Instead of doing like banks normally do and processing their credit transfers in several batches throughout the day, the SEPA instant system will process payments instantly with the potential to settle in real-time thanks to Open Banking.

Added to that, regular SEPA transfers are only executed on working days during business hours (8 AM to 8 PM, UCT+3) while SEPA Instant works around the clock, 365 days a year.

As for the price, both systems have a fixed cost per transaction for businesses (usually cents) and are free for private individuals.

In what concerns transfer execution, SEPA works within all SEPA country banks. However, to do so as SEPA Instant, banks need to be part of its SEPA Instant Scheme.

Who Created SEPA Instant?

The idea behind SEPA instant as a pan-European solution was put forward by the ERPB (Euro Retail Payments Board).

The ERPB is a high-level strategic entity with the objective of bringing more integration and innovation in what concerns SEPA in terms of the euro payments area while also fostering competitiveness.

Its 2014 proposal aimed at avoiding any fragmentation of systems while also fueling competition. To do so, it presented the following 4 layers:

· An end-user solution layer

· A scheme layer

· A clearing layer

· A settlement layer

How Did SEPA SCT Instant Alter the Payments Landscape?

As the digitalization of infrastructure rapidly progresses in the payments landscape, the launch of SEPA SCT Instant was a landmark in what concerns real-time, cross-border payment services between banks.

In turn, this new payment scheme brought out new business opportunities for several kinds of payments whether those are P2P transactions or P2P/B2B e-commerce payments, supply chain payments, and so forth.

How Popular is SEPA Instant?

European Central Bank’s data shows that the percentage of SCT Instant in all SEPA Credit Transfer transactions has been steadily growing over the years, as highlighted here:

SEPA Instant and B2B For Your Business Needs

There are at least 4 good reasons to be a part of the SEPA Instant framework.

1. Speed: With transfer speed being crucial in today’s business environment, SEPA Instant will guarantee you a transfer time of up to only 10 seconds, meaning your business operations can proceed without interruptions.

2. Availability: Speed is crucial but there’s also the matter of accessibility. With SEPA Instant, payments are constantly available. Being accessible around the clock will empower your business by enabling payment capabilities outside of regular business hours and on every single calendar day.

3. Flexibility: SEPA Instant transfers can be initiated regardless of the underlying payment instrument that is being used, but also irrespective of the underlying clearing and settlement arrangements. That means that whether it’s direct debit, payment cards, or credit transfer, everything will go as planned.

4. Transfer volume: SEPA Instant allows for a maximum of €100.000 transfer and as we all know, the more money you’re able to send and receive, the smoother your cash flow will be.

About SEPA

Whether you are operating in Europe already or planning to, SEPA instant is an elegant solution that gives you the tools to take your business operations to the next level.

The added speed and round-the-clock availability, make this system second to none in terms of instant payments, making it the absolute closest substitute to cash.

Accordingly, SEPA Instant can be a springboard for your business to better serve your existing customers, clients, or suppliers but also to attract new ones.