What is SEPA?

The Single European Payments Area (SEPA) is a regulatory initiative of the European Union (EU) to simplify and harmonise euro payments within designated countries. SEPA consists of the 27 European Union (EU) member states, plus Iceland, Liechtenstein, Norway, Switzerland and Monaco.

The main purpose of SEPA is to create an integrated euro payments market. It also aims to create a level playing field in the payment markets to enhance competition increase market transparency, and standardise rights and obligations. This has led to the introduction of the following two payment instruments:

1. The SEPA Credit Transfer (SCT), which introduces a pan-European transfer clearing network with reduced costs associated with cross-border transactions.
2. The SEPA Direct Debit (SDD), which provides a pan-European collection infrastructure that supports cross-border direct debits for both consumers and business collections.

These two instruments have established new business rules and file formats in corporate-to-bank communications.