SEPA credit transfer

A SEPA credit transfer is a euro payment between accounts at banks or other payment providers participating in the Single Euro Payments Area. The payer instructs the transfer using the recipient's IBAN, and the banks process the payment under a common scheme. The procedure supports both domestic and cross-border euro transfers.

Businesses and individuals use SEPA credit transfers to pay invoices, salaries and other obligations from a bank account. For an electronic standard transfer, the applicable execution period is generally one business day, while paper instructions can take two. The instant variant, SCT Inst, makes funds available within ten seconds and supports payments around the clock.

What the scheme fixes and since when

SEPA credit transfers have been available for domestic and cross-border euro payments since 28 January 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 1 February 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. SCT Inst 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.