Understanding SEPA payments: Everything businesses need to know

Key takeaways

• SEPA (Single Euro Payments Area) is a standardised payment framework that makes euro transfers across 40 European countries as simple and cheap as domestic ones.

• SEPA has four payment schemes: credit transfers, instant credit transfers, Direct Debit Core, and Direct Debit B2B. That means you can pick the right method for what your business needs, whether that's one-off supplier payments or recurring customer billing.

• With Airwallex, you can accept SEPA payments alongside 160+ other local payment methods through a single integration, settle in EUR to avoid conversion fees, and manage everything from one platform.

If you're expanding into Europe, traditional payment methods like wire transfers might be the first thing you think of. But, they often come with high fees and slow processing times. That can create cash flow uncertainty and push up running costs.

SEPA (Single Euro Payments Area) fixes that by making euro transfers across Europe work more like domestic ones: faster, cheaper, and more predictable. Even if your business is based outside the SEPA zone, you can still accept SEPA payments by working with a payment provider that supports them.

We'll cover what SEPA is, which countries take part, how SEPA payments work in practice, the different payment schemes available, how SEPA compares with SWIFT, and how to start accepting SEPA payments for your business.

What is SEPA?

SEPA is a payment framework that standardises euro transfers across 40 European countries. Think of it as one big domestic payment zone for euros. Sending €5,000 from Berlin to Madrid works the same way as sending it across town. The upside is lower fees, faster settlement, and simpler compliance than older cross-border methods like SWIFT payments.

The European Union created SEPA to cut through the complexity, delays, and high costs that used to come with cross-border euro transactions. It's governed by the European Payments Council (EPC), which sets the rules and standards that all participating banks and payment providers follow.¹

A common question is whether SEPA is the same as a bank transfer. The answer is yes and no. SEPA is a type of bank transfer, but it's specifically for euros within the SEPA zone. It uses consistent formats like IBAN (International Bank Account Number) and ISO 20022 messaging, which helps cut down failed transactions and manual errors.

SEPA also isn't limited to eurozone countries. Several countries that don't use the euro as their local currency, including the UK, Switzerland, Sweden, and Norway, are still part of the SEPA zone. So your business can send or receive EUR payments through SEPA even when you're dealing with those markets. And yes, the UK is still in SEPA despite Brexit.

Which countries are in the SEPA zone?

As of March 2025, the European Payments Council lists 40 countries and territories in the SEPA zone.¹

EU/EEA countries (30): Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden.

Non-EEA countries (10): Albania, Andorra, Moldova, Monaco, Montenegro, North Macedonia, San Marino, Switzerland, United Kingdom, Vatican City State.

Non-EEA territories (4): Saint-Pierre-et-Miquelon, Guernsey, Jersey, Isle of Man.

All of these support SEPA for EUR transactions, even if they don't use the euro as their local currency.

What do you need to make a SEPA payment?

To send a SEPA payment, you'll need:

• IBAN (International Bank Account Number): the recipient's account number in the standardised European format

• BIC/SWIFT code: the bank identifier code (though this is often optional for domestic SEPA transfers)

• Payee name: the name on the recipient's account

• Payment amount in EUR: SEPA only handles euro-denominated transfers

One quick clarification. SEPA and IBAN aren't the same thing. IBAN is the account number format that SEPA payments use, a bit like how a postcode is part of an address but isn't the address itself.

How do SEPA payments work?

When you start a SEPA payment, your bank sends the instruction through the SEPA clearing system instead of routing it through correspondent banks. That can happen with SWIFT, although most SWIFT payments are conducted directly or with a single intermediary. This direct routing is what makes SEPA faster and cheaper.

The process is standardised. Your bank checks the payment details, submits them to the SEPA clearing infrastructure, and the recipient's bank credits their account. Because everyone uses the same formats and rules, there's less room for errors or delays.

How long do SEPA payments take?

Processing times depend on which SEPA scheme you're using:

• SEPA Credit Transfer: usually within one business day

• SEPA Instant Credit Transfer: up to 10 seconds, available 24/7/365

• SEPA Direct Debit Core: five business days before the due date for first collections, two days for recurring ones

• SEPA Direct Debit B2B: one business day or same-day, depending on the bank

Just keep in mind that weekends and bank holidays can affect non-instant transfers.

How much do SEPA payments cost?

Costs vary by provider, but SEPA transfers are usually much cheaper than SWIFT. Because SEPA payments are bank-to-bank, you avoid the card network fees you'd pay on card transactions. For consumers, SEPA transfers are often free or very low-cost. For businesses, the savings on cross-border fees compared with traditional methods can be significant, especially if you're processing high volumes.

What is SEPA Direct Debit?

SEPA Direct Debit is a payment processing scheme that lets you collect payments in euros straight from your customer's bank account. Think of it like a standing order in reverse. Instead of the customer pushing the payment, your business pulls it from their account, but only after they've given written permission through a Direct Debit mandate.

This cuts down admin. Once your customer authorises the mandate, you can automatically withdraw agreed amounts on a set schedule. For example, your customer may authorise a €10 payment every month, and you'll be able to deduct it automatically. That means less chasing invoices and fewer late payments to deal with.

There are two types of SEPA Direct Debit schemes: SEPA Core, for consumer transactions, and SEPA B2B, for business-to-business transactions. We'll go through the differences in the payment schemes section below.

How to set up SEPA Direct Debit

Here's how to get started:

• Get a mandate from the customer that clearly sets out the payment terms, including the payment amount, frequency, and the customer's right to a refund.

• Partner with a SEPA-compliant payment provider with a payment processing system that supports SEPA Direct Debit.

• Secure your transactions with bank-level security measures such as encryption and real-time transaction monitoring to protect customer data.

• Manage and track payments in real time with reporting tools that give you visibility into settlement statuses and failed payments.

For example, a streaming platform can set up monthly debits from its customers' bank accounts to cut payment delays and errors. With Airwallex, you can automate the whole process, from collecting mandates to starting debits and reconciling payments.

Why offer SEPA Direct Debit to your customers

Card usage for cross-border online shopping is lower in Europe than you might expect. Just 39% of shoppers in Europe prefer to pay with credit cards, compared with 72% in the US and 57% in the UK. In Germany and the Netherlands, bank-based payment methods like SEPA and iDEAL are still popular, with iDEAL even surpassing card usage in the Netherlands.

When you're expanding into Europe, offering a preferred payment method like SEPA Direct Debit can help you:

• Drive higher conversions: customers see a reliable, secure payment method that matches their preferences. You also make checkout simpler by automating the process with a single upfront authorisation.

• Reduce payment processing costs: SEPA payments are bank-to-bank, so you pay lower transaction fees than you would through card networks. You avoid the intermediary fees and hidden charges that are common in older systems like SWIFT.

• Get strong security: SEPA is governed by the European Payments Council and follows EU directives like PSD2, which enforces strong customer authentication and strict data protection.

Preferred payment methods when buying online from another country

Types of SEPA payment schemes

SEPA has four payment schemes, and each one fits different business needs. Here's how they compare:

SEPA Credit Transfer

If you're paying suppliers, processing refunds, or moving funds between accounts, SEPA Credit Transfer lets you send and receive cross-border payments within the eurozone, usually within one business day. This scheme is normally used for one-time payments like payroll, invoices, and supplier payments.

SEPA Instant Credit Transfer

SEPA Instant Credit Transfer processes payments in as little as 10 seconds. Unlike standard credit transfers, it's available 24/7/365, including weekends and bank holidays. That makes it a good fit for eCommerce platforms, mobile payments, and other time-sensitive transactions. The current maximum transaction limit is €100,000, though that's set to increase under new EU regulations.

SEPA Direct Debit Core

SEPA Direct Debit Core lets you automatically debit funds from your customers' accounts once they provide a mandate. It's built for collecting recurring consumer payments.

For the first collection, you'll need to submit the request at least five business days before the payment is due. For recurring collections, that lead time drops to two business days. This processing window might not work well for businesses that need immediate payment confirmation.

One detail to keep in mind: consumers have the right to ask for a refund within eight weeks for authorised transactions, or 13 months for unauthorised ones. That affects your cash flow planning, so it's worth factoring in.

SEPA Direct Debit B2B

SEPA Direct Debit B2B is designed for business-to-business transactions. The key difference from Core is that the debtor's bank must verify the mandate before the first collection. That adds another layer of security for large or sensitive transactions.

B2B also supports customised payment terms and conditions, which is useful if you have complex payment requirements with different schedules, amounts, or conditions for different payees. And unlike Core, the payer has no refund right, which gives you more payment certainty.

SEPA vs SWIFT: What's the difference?

SEPA and SWIFT solve different problems. If SEPA is a high-speed rail network connecting European cities, SWIFT is more like an international airline network, reaching further across 220+ countries and territories but with variable costs and processing times depending on the route.

If you're moving euros within Europe, SEPA is usually the faster and cheaper option. If you need to send payments globally in multiple currencies, SWIFT is the established network for that.

Accept SEPA payments with Airwallex

If you're ready to accept SEPA payments, you don't need a separate provider just for that. With Airwallex, you can accept SEPA payments alongside 160+ other local payment methods, all through a single integration. So there's no long setup and no need to juggle multiple providers.

Here's what that looks like in practice:

• Single integration: Connect our payment solution to your existing systems and start accepting payments in minutes.

• Like-for-like EUR settlement: Settle EUR payments straight into a EUR currency account, which helps you avoid unnecessary conversion fees. You can also pay out from the same balances with no conversions needed.

• Local currency pricing: Let your customers see exact pricing in EUR with automatic currency conversion, which cuts confusion at checkout and can drive higher conversions.

• Compliance and security: Airwallex is licensed by the Dutch Central Bank for the European Economic Area. Our platform is PCI DSS Level 1 certified and SOC 1 and SOC 2 compliant. Your payments stay compliant with EU regulations and protected with bank-level security.

More than 150,000 businesses trust Airwallex to process over US$150 billion in global payments each year. You can receive, hold, manage, and transfer EUR with our all-in-one platform, which saves on both the cost and the hassle of managing multiple providers.

Frequently Asked Questions (FAQs)

What are SEPA payments?

SEPA payments are euro bank transfers that work across 40 European countries under one standardised framework. They're faster and cheaper than traditional cross-border methods like SWIFT, and settlement times are predictable.

What's the difference between SEPA and SWIFT?

SEPA is a European payment network for euro transfers across 40 countries. SWIFT is a global messaging network that connects banks in 220+ countries and territories and supports multiple currencies. Use SEPA for euro payments within Europe. Use SWIFT for international payments outside the SEPA zone or in non-euro currencies.

Is the UK still part of SEPA?

Yes. Even after leaving the EU, the UK remains part of the SEPA zone. UK banks can still send and receive SEPA payments in euros.

Is SEPA the same as IBAN?

No. IBAN (International Bank Account Number) is the account number format used within the SEPA system. You need an IBAN to make a SEPA payment, but they're not the same thing. Think of IBAN as the address and SEPA as the postal service.

How do I set up SEPA Direct Debit for my customers?

You'll need a signed mandate from your customer that authorises you to debit their account. From there, you submit collection requests through your payment provider. With Airwallex, you can automate the whole process, from collecting mandates to starting debits and reconciling payments.