Introducing the Single Euro Payments Area (SEPA)

SEPA covers all of the EU member states, together with Iceland, Liechtenstein, Norway, Switzerland and Monaco.

SEPA, created a single market for euro-denominated retail payments, allowing payment services users to make cashless, euro-denominated payments to payees located anywhere in the area that it covers under the same basic terms and conditions, using just one payment account and a single set of payment instruments.

In simple terms, anyone who holds a payment account with a bank or other payment service provider (PSP) located in the countries covered by SEPA will be able to send and receive euro-denominated payments from, accounts anywhere else in SEPA.

The European Central Bank (ECB) has published some useful general background information on SEPA, including Single Euro Payments Area SEPA – An integrated retail payment market brochure and SEPA video overview.

Retail payments are the normal, 'everyday' payments that we are all familiar with. They are generally of relatively low value, are usually not time-critical and can be made by either companies or consumers. For example, payments made by consumers to retailers or to utility or media providers are examples of retail payments.

One of the main objectives of SEPA is to be able to make payments in euro with a single payment account and a set of harmonised payment instruments, anywhere in the European Union.  The SEPA Regulation prevents any payee within the Single Euro Payments Area (SEPA) wishing to initiate a SEPA direct debit transaction from specifying where the payer must maintain their payment account; e.g., an Irish company initiating a SEPA direct debit payment cannot insist that the payer open or maintain an Irish bank account for this purpose.

European Payments Council (EPC)

The EPC manages five payment schemes

• The SEPA Credit Transfer scheme.
• The SEPA Instant Credit Transfer scheme.
• The SEPA Direct Debit Core scheme.
• The SEPA Direct Debit Business-to-Business scheme.
• The One-Leg Out Instant Credit Transfer scheme.

The EPC designs and manages euro payment and payment-related schemes that contribute to the creation of a single payments market in Europe and facilitate economic exchanges in the Single Euro Payments Area (SEPA).

Find out more about EPC and their involvement in SEPA

EBA Clearing

EBA CLEARING is a provider of pan-European payment infrastructure solutions, including:

• STEP2-T: SEPA mass payment system for credit transfers and direct debits
• RT1: SEPA instant payments system for euro real-time payments
• R2P: SEPA request to pay messaging service

Find out more about EBA Clearing and their involvement in SEPA

Credit Transfers

A credit transfer is a payment initiated by the payer. The payer issues a payment instruction to their payment service provider (PSP). The payer’s PSP then moves the specified amount to the payee’s PSP. A PSP can be a bank, a credit union, a payment institution, or an e-money institution. A credit transfer can be ‘standard’, also known as ‘classic’, or it can be ‘instant’. A standard credit transfer takes upwards of 24 hours to settle, while an instant credit transfer must settle within 10 seconds.

Direct Debits

Direct debits are typically used for recurring payments such as utility bills. A direct debit payment is initiated by the payee via its PSP. A direct debit requires the consent of the payer, given to the payee in the form of a mandate. Direct debits can also be used to make ‘one-off’ payments, but this practice is not widespread in Ireland.

Request to Pay

The SEPA Request-to-Pay (SRTP) scheme covers the set of operating rules and technical elements (including messages) that allow a payee to request the initiation of a payment from a payer in a wide range of physical or online use cases. While not prevalent in Ireland this functionality is available through this messaging function. The scheme can be considered as a complement to the payment flow because it supports the end-to-end process and lies between an underlying commercial transaction and the payment itself. An RTP as such can be seen as an enabler for digital payments.

SEPA Proxy Look Up

The SEPA Proxy Lookup (SPL) service makes it considerably easier for end users to make mobile person-to-person (P2P) payments securely and highly comfortable across borders and communities. Customers can use their mobile device to transfer money from their bank account to another individual’s account across Europe without manually exchanging payment information, such as IBAN. The European Payments Council (EPC) created and manages the SPL scheme, as this solution builds interoperable European (mobile) P2P payment solutions. While not prevalent in Ireland, this functionality is available.

Regulation (EU) 2024/886, also known as the Instant Payments Regulation (IPR), entered into force in April 2024, bringing significant changes to the SEPA Regulation. It introduced mandatory requirements for instant credit transfers in euros.

SEPA instant credit transfer (SCT-Inst) allows you to send or receive euro-denominated payments within ten seconds. Instant payments can be made through all the channels that can be used to place non-instant credit transfers, such as online, in store and at a bank branch, and they can be made electronically at any time.

The ability to receive SEPA instant credit transfers in euro became mandatory for euro area PSPs on 9 January 2025, and the ability to send these transfers will become mandatory on 9 October 2025.

In Ireland, Central Bank of Ireland is the competent authority for the purposes of the SEPA Regulation, including the amendments introduced by the Instant Payments Regulation.

Email[email protected] with Instant Payments Regulation – Non-Compliance in the title

Under the SEPA Regulation, all PSPs are required to enable all users to unambiguously identify a payment account solely by its International Bank Account Number (IBAN). IBAN means an international payment account number identifier, which unambiguously identifies an individual payment account in a European Union Member State.

IBAN discrimination is where an IBAN from another SEPA country is not accepted by either the payer or the payee for a direct debit or a credit transfer payment. IBAN discrimination is a barrier to the smooth functioning of SEPA, undermining its benefits, such as the freedom to pay from anywhere within the SEPA area and the freedom to use only one payment account. All such cases are in breach of SEPA Regulations. For more information, please see our Explainer: What is ‘IBAN discrimination’ and what can I do about it?

In Ireland, Central Bank of Ireland is the competent authority in the State for the purposes of the SEPA Regulation, for cases including, but not limited to:

• employers
• payment service providers (e.g. banks)
  
• trader-trader relationships (e.g. where the payee is a vendor and the payer is a business)

Central Bank of Ireland monitors compliance with the SEPA Regulation and takes all necessary measures to ensure compliance.The Competition and Consumer Protection Commission (CCPC) is the competent authority regarding cases involving consumers and traders (for example, utility or telecommunications providers).

If you wish to report a suspected IBAN discrimination please contact the relevant competent authority:
You can contact the Central Bank at [email protected]. Please include the following information where possible:

• if your SEPA IBAN is being outright refused or if it is being accepted under certain conditions
• the name of the entity/employer which is refusing to facilitate payment to or from your SEPA IBAN
• relevant contact details for the entity/employer
• the rationale provided by the entity/employer for refusing to accept your SEPA IBAN, or accepting your IBAN under certain conditions
  
• the country code (first two digits) of your SEPA IBAN

Please refer to the CCPC in cases involving consumers and traders (for example, utility or telecommunications providers): Competition and Consumer Protection Commission (CCPC).

What is happening?

The Single Euro Payments Area (SEPA) initiative in Ireland came into force in 2014, creating a single market for euro-denominated retail payments, which changed the processing of retail electronic payments. Therefore, as a result of the change in processing an issue has arisen with some retail payments due to be received into personal and business bank accounts on 1 May. This issue arises because 1 May is a normal business day in Ireland on which the banks here are open. However, the European-wide system in which euro interbank transactions are settled is closed, as this date is a Bank Holiday in most EU member states.

How will this impact me?

Some euro payments will not be credited to / debited from customer accounts on that date. This will mean that if you are due to receive a payment into your account or if you are due to make an automated payment on that date the payment may not be made until the next normal working day after 1 May.

Are there any payments that will not be affected?

Where both the payer’s account and the beneficiary’s payee’s account are held with the same bank payments will settle as normal.

What has been done about this?

Banks have advised their business customers that to avoid any issues arising with payees, payers should either make their payments one normal working day early (i.e., on 30 April) or else advise payees that payments due on 1 May might not be received until the next normal working day after 1 May.

Is Ireland the only country in eurozone affected by this issue?

No, customers in the Netherlands will be similarly affected.

Will this happen every year?

As things stand, this issue will recur where 1 May does not coincide with the Irish May Bank Holiday (i.e. first Monday in May).

Implementation of the SEPA concept required a common legal framework covering retail payments to be put in place in all participating countries. This legal framework ensures that the terms and conditions applicable to SEPA payments are the same regardless of the countries in which the parties involved in any transaction are located. The legal framework underlying SEPA takes the form of EU Directives and EU Regulations.

The principal EU legislation covering SEPA is Regulation (EU) No. 260/2012 (its full title is Regulation (EU) No. 260/2012 of the European Parliament and of the Council establishing technical and business requirements for credit transfers and direct debits in euro and amending Regulation (EC) No 924/2009), which set 1 February 2014 as the deadline in the euro area for replacement of national credit transfer and direct debit payments with SEPA equivalents (although this was subsequently postponed to 1 August 2016); the deadline for non-euro area member states was 31 October 2016.

Regulation (EU) No. 260/2012 also requires the use of common standards and technical requirements, such as the use of IBAN and the ISO 20022 XML financial services messaging standard for credit transfer and direct debit payments in euro. In addition, Regulation (EU) No. 260/2012 amends and replaces some of the provisions contained in the earlier Regulation No 924/2009, for instance by extending that Regulation’s equal charging principle for cross-border and national payments in euro to all transactions, irrespective of the payment amount.

The Payment Services Directive (generally referred to as the PSD – the full title is Directive 2007/64/EC of the European Parliament and of the Council of 13 November 2007 on payment services in the internal market amending Directives 97/7/EC, 2002/65/EC, 2005/60/EC and 2006/48/EC and repealing Directive 97/5/EC) is also relevant in the context of SEPA. The purpose of this Directive was to harmonise the laws covering payment services in EU member states, particularly with regard to (a) the rights and obligations of PSPs and consumers and (b) facilitating greater pan-European competition and participation in the payments industry.