Lorem ipsum

Lorem ipsum

Image
Choose your country

What is a SEPA payment? Explanation and benefits

Person
Image

A SEPA payment is a euro-denominated bank transfer between accounts within the Single Euro Payments Area. For US-based businesses operating in Europe, SEPA simplifies cross-border euro transactions, making them as straightforward as local payments. On this page, you’ll find out what SEPA means for your business.

Table of contents:

  1. The background of SEPA: why it was established
  2. What types of SEPA payments exist?
  3. How do SEPA payments work?
  4. What are the benefits of SEPA?
  5. In which countries is SEPA available?
  6. Automate SEPA payments with Payt
  7. Frequently asked questions about SEPA payments

The background of SEPA: why it was established

The Single Euro Payments Area (SEPA) was introduced in 2008 by the European Union to harmonize euro payments across Europe. Before SEPA, international euro transactions were often slow and expensive. SEPA solves this by unifying transfers, direct debits, and payment cards under one standardized system.

Goals of SEPA:

  • Faster and cheaper euro payments within Europe
  • A single set of payment rules for all participating countries
  • Easier handling of salary payments, subscriptions, and invoices

What types of SEPA payments exist?

There are two main types of SEPA payments:

TypeDescriptionExamples
SEPA Credit Transfer (SCT)Single euro transfer between two IBAN accounts within the SEPA areaInvoice payment
SEPA Direct Debit (SDD)Automatic debit based on prior customer authorization from the customerSubscriptions, utility bills, memberships

How do SEPA payments work?

SEPA payments follow a clearly structured process.

For a SEPA Credit Transfer (one-time transfer):

Image
  1. Enter the payment details: recipient’s IBAN, amount in euros, and optional reference.
  2. Submit the payment through your bank or accounting software.
  3. The bank processes the payment and routes it via the SEPA network.
  4. The recipient typically receives the funds within one business day.

For a SEPA Direct Debit (automatic debit):

Image
  1. The customer provides a mandate: a written or digital authorization.
  2. You submit the debit request to your bank with the mandate and customer information.
  3. The customer’s bank processes the debit and withdraws the funds.
  4. You receive the amount, usually the same or next business day.

Thanks to SEPA, this process is consistent across all participating countries—reliable, fast, and efficient.

What are the benefits of SEPA?

SEPA benefits both businesses and consumers:

  • Low costs: no extra transaction fees within the SEPA area
  • Fast processing: usually credited within one business day
  • Standard IBAN format: one system for account numbers across Europe
  • Simplified collections: unified rules for direct debit improve clarity and trust

In which countries is SEPA available?

According to the official European Payments Council document (EPC409-09, version 7.0, published May 22, 2025), the SEPA area includes:

  • 27 EU member states
  • 3 EEA countries: Iceland, Liechtenstein, and Norway
  • 11 non-EEA countries, including the United Kingdom, Switzerland, and Andorra

This brings the total to 41 countries.

Some overseas and crown territories such as Guernsey, Jersey, and Isle of Man are also part of SEPA. Including these, the total exceeds 45 territories.

Automate SEPA payments with Payt

With Payt, you can automate SEPA direct debits (SEPA Direct Debit) to collect outstanding invoices faster and without manual work. As soon as a customer provides authorization, Payt automatically initiates the debit on the agreed due date. This improves your cash flow and reduces administrative hassle.

In the platform, you always have real-time insight into who has paid and who still needs to pay. This helps you stay in control of your receivables and save valuable time.

Frequently asked questions about SEPA payments

SEPA credit transfers are usually processed within one business day. If you submit the payment before your bank’s cut-off time, the recipient may receive the funds on the same day, but typically it’s credited the next business day. Same-day delivery isn’t guaranteed, but SEPA ensures fast and reliable euro transactions.

A SEPA payment is made via bank transfer or direct debit within the SEPA area. You enter the recipient’s IBAN, the amount in euros, and an optional reference. With Payt, you can automate these payments so your customer pays on the agreed due date.

 A SEPA Credit Transfer is usually processed within one business day. If submitted before your bank’s cut-off time, the beneficiary often receives the funds on the same or next business day. With Payt, you track the payment status in real time.

SEPA payment files are XML files that contain instructions in SEPA format. These are generated by your ERP or accounting software and submitted to the bank. Payt simplifies this process by generating and sending SEPA direct debits automatically.

Yes, but processing will only start on the next business day. Banks process SEPA transactions only on working days. With Payt, you can schedule in advance, so payments are debited exactly on the right day—even after the weekend.

Image

By Xindu Hendriks

Xindu is an expert in digital strategy and accounts receivable management at Payt. She is known for her analytical approach.

Share this article

Remove Cookie