SEPA credit transfer: the euro transfer rulebook from bank to bank
The SEPA credit transfer is the scheme for euro transfers between payment accounts in the Single Euro Payments Area. The payer starts the payment, the payer's bank sends it, and the payee's bank must have the money within one business day. Its instant variant, SCT Inst, does the same in about ten seconds.
What the scheme fixes and since when
SEPA credit transfers have been available for domestic and cross-border euro payments since January 28, 2008, according to the Bundesbank. Since January 2012 the execution time is at most one banking business day, two days for a transfer handed in on paper. In February 2014 the SEPA credit transfer replaced the national credit transfer schemes in the euro countries, and since February 1, 2016, the payer only needs the IBAN for a transfer inside the EEA. A payment to a SEPA country outside the EEA still needs the BIC.
The scheme is euro only. The ECB counts 41 countries in the SEPA region, EU members and non-EU countries alike. The rules come from the European Payments Council, which also runs the scheme for SEPA direct debits, where the payee pulls the money.
SCT Inst: the same transfer in ten seconds
The SEPA instant credit transfer launched in November 2017 as a separate scheme. It runs around the clock on every day of the year and has to reach the payee's bank in ten seconds or less. Under the EU instant payments regulation, banks in the euro area must offer it at no higher price than a standard transfer and run a verification of payee before the payer confirms. Finance Loop covers the regulation in instant payments in Europe.
The instant scheme allows 140 characters of unstructured remittance information (Corefy), as does the standard transfer. Companies send both as ISO 20022 files, which Finance Loop describes under SEPA XML.
Where a SEPA transfer is cleared and settled
Between two banks, a SEPA credit transfer passes through a clearing house such as STEP2 of EBA Clearing or the Bundesbank's own mass payment system, and the net positions settle in central bank money in T2. Instant transfers settle in TIPS or through RT1. That is why a standard transfer depends on TARGET closing days and an instant one does not.
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How long does a SEPA credit transfer take?
At most one business day after the payment order is received, if the payer orders it electronically. A paper transfer may take two. Each bank sets its own cut-off time in the day; an order after the cut-off counts as received on the next business day.
Can a SEPA credit transfer be reversed?
Not by the payer once it has been executed. The payer's bank can send a recall, for example after a duplicate or a wrong amount, but the payee's bank needs the payee's consent to return the money. That is one reason the name check of verification of payee now runs before the payment.
What is the difference between a SEPA transfer and a Swift transfer?
A SEPA credit transfer is a euro payment under one rulebook with fixed execution times and no deductions from the amount. A Swift transfer is a message between banks that can carry any currency to any country and often passes several correspondent banks, each of which may charge a fee.
SEPA credit transfer and Finance Loop
Finance Loop brings together the payments teams of banks and payment institutions that process SEPA transfers, and the corporate treasurers who send them in bulk. Finance Loop supports When Banks Say 'No', a Frankfurt seminar on international payment flows, sanctions and de-risking.
Finance Loop is a professional network and has the goal of driving the adoption of emerging technologies in finance, such as AI, digital payments, cloud and blockchain solutions. Finance Loop helps its members build skills and personal networks in these fields: Investment & Digital Assets, Payments & Digital Money, Digital Infrastructure & Sovereignty, and Risk & Compliance.