Understanding SEPA payments: Everything businesses need to know

Key takeaways:

• The Single Euro Payments Area (SEPA) is a standardized payment framework that makes cross-border euro (EUR) payments as easy and efficient as domestic ones across 40 countries within the SEPA zone.

• SEPA lets you collect payments faster and more cost-effectively within the eurozone than legacy systems like SWIFT.

• You can offer SEPA Direct Debit as a local payment method to automate recurring payment collection, with predictable settlement timelines that streamline your cash flow.

If you’re expanding your business to Europe, traditional payment methods, such as wire transfers, may be the first thing that comes to mind when you think about cross-border payments. However, these methods often incur high fees and slow processing times, leading to uncertainty in cash flow and higher operational costs. In comparison, Single Euro Payments Area (SEPA) streamlines euro-denominated international bank transfers by making them equivalent to domestic transfers within the SEPA zone. This makes SEPA a faster and more cost-effective option when scaling your business across the eurozone. Businesses outside the SEPA zone can still accept payments via SEPA by partnering with a payment provider offering SEPA as a payment method.

Below, we'll look at what SEPA is, how cross-border payments work with SEPA, and how SEPA Direct Debit as a payment method helps you expand into European markets. We’ll also cover the different SEPA payment processing schemes and how to choose the right one for your needs.

What is SEPA?

Single Euro Payments Area (SEPA) is a payment-integration initiative started by the European Union (EU) to simplify cross-border euro (EUR) payments across borders, by standardizing regulations, formats, and processing timelines across the SEPA zone. With the SEPA system, you can receive direct debit payments from any euro-denominated bank account in the SEPA zone through a consistent and secure process. You can settle payments faster and more cost-effectively across the eurozone than legal systems like SWIFT.

As of March 2025, the European Payment Council has updated the countries and territories that are part of the geographical scope of the SEPA schemes:

• 27 member states of the European Union (EU), also known as the eurozone

• 3 countries of the European Economic Area (EEA)

• 10 non-EEA countries, to which the geographical scope has been extended

• 3 non-EEA territories

These 40 countries support SEPA for EUR transactions, even if they don’t use EUR as their local currency. This means your business can send or receive EUR payments through SEPA even in countries that don’t use EUR locally.

EU/EEA SEPA countries:

1. Austria

2. Belgium

3. Bulgaria

4. Croatia

5. Cyprus

6. Czech Republic

7. Denmark

8. Estonia

9. Finland

10. France

11. Germany

12. Greece

13. Hungary

14. Iceland

15. Ireland

16. Italy

17. Latvia

18. Liechtenstein

19. Lithuania

20. Luxembourg

21. Malta

22. Netherlands

23. Norway

24. Poland

25. Portugal

26. Romania

27. Slovakia

28. Slovenia

29. Spain

30. Sweden

Non-EEA SEPA countries

1. Albania

2. Andorra 

3. Moldova

4. Monaco

5. Montenegro

6. North Macedonia

7. San Marino

8. Switzerland

9. United Kingdom

10. Vatican City State

Non-EEA territories

1. Saint-Pierre-et-Miquelon

2. Guernsey

3. Jersey, Isle of Man

What is SEPA Direct Debit?

SEPA Direct Debit is a payment processing scheme that lets you collect payments in euros directly from your customer’s bank account. It reduces the administrative burden by automating recurring transactions. All you need is a one-time authorization from your customer to initiate future payments automatically, based on the agreed-upon frequency and amount. For example, your customer may authorize a €10 monthly payment, which you can deduct automatically with SEPA Direct Debit. This automation reduces manual effort, minimizes delays, and creates a predictable revenue stream for businesses collecting recurring payments.

Two types of SEPA Direct Debit schemes exist: SEPA Core and SEPA B2B. The SEPA Core Direct Debit scheme is for consumer transactions, offering individuals a flexible and user-friendly option for everyday payments. The SEPA B2B Direct Debit scheme is for business-to-business transactions, providing businesses with a more stringent and secure framework and a shorter processing time. We'll discuss these two schemes later when we examine the four types of SEPA payment processing schemes.

Receiving international direct debit payments from SEPA countries

SEPA was established to reduce the complexity, delays, and high costs traditionally associated with cross-border euro transactions. By unifying 40 countries under one payment framework, SEPA makes receiving cross-border euro payments as easy as making domestic transfers.

Simplify transactions with standardized payment processing

With SEPA, you follow unified payment standards that streamline payment processing, reconciliation, and reporting, reducing the need to adapt to different local standards. Whether you're collecting subscription fees from customers in France, receiving invoice payments from clients in Germany, or managing recurring debits across multiple EU markets, SEPA ensures all payments are processed the same way. SEPA uses consistent formats such as International Bank Account Number (IBAN) and ISO 20022 messaging to standardize how euro payments are sent and received, reducing failed transactions and manual errors.

Stay compliant with EU-wide regulations

SEPA makes it easier to comply with EU regulations across the eurozone. All SEPA participants operate under the same regulatory framework, such as the Payment Services Directive 2 (PSD2) for payment security and GDPR for data protection. This standardized framework guarantees that all transactions align with the necessary legal and regulatory requirements, reducing your compliance overhead and the risk of costly penalties as you scale across Europe. Adhering to SEPA regulations shows that you operate within the legal framework and uphold the high standards expected in the eurozone, helping you build trust and credibility.

Predict cash flow with clear settlement timelines

SEPA provides a consistent, reliable payment framework. Compared to traditional methods, which may take several days, involve multiple intermediaries, and lack clear timelines, SEPA offers a faster and more transparent experience. For example, SEPA Credit Transfers typically settle within one business day, while SEPA Direct Debit follows predictable schedules with fixed cut-off times. With predictable settlement timelines, you can forecast your cash flow more accurately and avoid delays common with traditional cross-border payment methods.

Accepting regular payments with SEPA Direct Debit

SEPA Direct Debit is suitable for businesses that collect recurring payments, such as subscription or membership fees. Once your customer provides a one-time authorization, known as a mandate, you can automatically withdraw agreed-upon amounts from their bank account on a set schedule. This automation saves you from manual invoicing and late payments. For example, a streaming platform can set monthly debits from customers’ bank accounts to minimize payment delays and errors.

Here's how you can set up SEPA Direct Debit:

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

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

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

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

Benefits of using SEPA Direct Debit in low-card-use countries

Compared to the US and UK, card use remains low for cross-border online shopping: Just 39% of European shoppers prefer to pay with credit cards, compared to 72% in the US and 57% in the UK. Regarding SEPA, 7% of European shoppers prefer to pay with the payment method when shopping online, cross-border.

Bank-based payment methods in Germany and the Netherlands, including direct debits and transfers like SEPA and iDEAL, remain popular, with iDEAL surpassing card usage. While shoppers in France seem to favor credit and debit cards, SEPA still outranks other payment methods, including Amazon Pay, Samsung Pay, and Alma. When expanding into Europe, offering a preferred payment method like SEPA Direct Debit can help boost conversions, build trust, and capture more customers.

Preferred payment methods when buying online from another country

SEPA ranks 8th across France, Germany, and the Netherlands.

Source: Statista, Airwallex

Drive higher conversion rates at checkout

When you offer SEPA Direct Debit, customers see a reliable, secure, and convenient payment method that aligns with their payment preferences. You simplify how customers can pay you by automating the process with a single upfront authorization, reducing checkout friction. Knowing that their payments will be processed via SEPA can reassure customers that their transactions are being handled efficiently and securely, leading to increased trust and higher conversion rates.

Reduce payment processing costs

Payments processed via SEPA are bank-to-bank, so you pay lower transaction fees than payment processing via card networks. You get to bypass intermediary fees and hidden charges that you would typically incur when processing international payments via legacy systems like SWIFT. If you have a EUR currency account, you can save on unnecessary currency conversion fees when you receive, hold, and settle payments in EUR.

Get bank-level security on your payments

Every payment method comes with its own risks. SEPA is governed by the European Payments Council (EPC) and is built on robust regulatory standards. It adheres to EU directives like the Payment Services Directive 2 (PSD2), which enforces strong customer authentication (SCA) and strict data protection. Participating banks and payment providers must meet high security and compliance standards, including data encryption, fraud monitoring, and customer identity verification.

Types of SEPA payment processing schemes

Here's a quick overview of the four types of SEPA payment processing schemes:

SEPA Credit Transfer

Whether paying suppliers, processing refunds, or transferring funds between accounts, SEPA Credit Transfer lets you send and receive cross-border payments within the eurozone in as little as one business day. This is usually used for one-time payments, such as payroll and invoices.

SEPA Instant Credit Transfer

SEPA Instant Credit Transfer processes payments faster than SEPA Credit Transfer, in as little as ‌10 seconds. It's ideal for businesses that require real-time payments, such as eCommerce platforms, mobile payments, and other time-sensitive transactions.

SEPA Direct Debit Core

SEPA Direct Debit Core lets you automatically debit funds from your customers' accounts once they provide a mandate. This scheme is usually used to collect recurring customer payments. Under this scheme, you must submit the collection request at least five business days before your payment is due and at least two days in advance for subsequent collections. The two-day processing time might not be ideal if you need immediate payment confirmation.

SEPA Direct Debit B2B

SEPA Direct Debit B2B is tailored for collecting recurring business-to-business (B2B) transactions. This scheme incorporates additional validation checks for a more secure process, making it a better option if your business manages large transactions or transactions that involve sensitive financial data. SEPA Direct Debit B2B also supports customizable payment terms and conditions, which are helpful for companies with complex payment requirements. For example, you can set up different payment schedules, amounts, and conditions based on ‌specific agreements with your payees.

Processing SEPA payments

When choosing a SEPA payment processing scheme, the decision often hinges on your business needs, including transaction volume, transaction frequency, customer preferences, and security requirements. For example, a business collecting low-frequency customer payments may find SEPA Direct Debit Core more suitable. In contrast, a business handling a large volume of high-value transactions may benefit more from SEPA Direct Debit B2B.

Businesses can process SEPA payments through banks or modern payment platforms. Some opt to work directly with their banks, appreciating the familiar relationship and security it provides. Others prefer modern payment platforms that offer integrated solutions such as automated collection, real-time tracking and reporting, and robust fraud protection. Our platform, Airwallex, provides fast onboarding, easy integration, and real-time payment tracking. We help businesses like yours manage mandates, monitor settlement statuses, and automate reconciliation.

Expand into the eurozone with SEPA and 160+ local payment methods

With Airwallex, you can accept SEPA payments at lower costs, with clear settlement times and accurate cash flow management. Our platform offers 160+ local payment methods, including SEPA payments for 27 eurozone countries and popular methods like Sofort, Paysafecash, and Satispay. With just one integration, you can easily connect our payment solution with your existing financial systems. Start accepting payments in minutes without the lengthy setup times that often come with traditional systems.

With Airwallex’s automatic currency conversion and local currency pricing, you can let your customers view exact pricing in EUR, reducing confusion during checkout and driving higher conversions.

Plus, you can settle EUR payments like-for-like directly in a EUR currency account, saving on unnecessary currency conversion fees. Pay out from the same balances, with no conversions needed. Receive, hold, manage, and transfer EUR with our all-in-one platform, saving on the cost and hassle of managing multiple providers.

We also take care of compliance, so you don’t have to. Airwallex is licensed and regulated by various financial authorities around the world, including the Dutch Central Bank for the European Economic Area. Besides regulatory requirements, our platform meets the highest international security standards, including PCI DSS, SOC1, and SOC2 compliance. With Airwallex, your payments will comply with EU regulations and be safeguarded with bank-level security. More than 150,000 businesses trust Airwallex to process over US$100 billion in global payments annually.

Frequently asked questions

1. What are the benefits of using SEPA payments for my business?

SEPA payments let you send and receive euro payments across 40 countries in the SEPA zone. They're fast, cost-efficient, and follow a standardized framework with predictable settlement timelines.

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

You’ll need to obtain a mandate from your customer that authorizes you to debit euro payments from their bank account. With Airwallex, you can automate the entire process, from collecting mandates to initiating debits and reconciling payments.

3. What countries are included in the SEPA zone?

The SEPA zone includes 40 countries, including all EU member states, European Economic Area (EEA) countries, and non-EEA countries such as the UK and Switzerland.

4. What is the difference between SEPA Core and SEPA B2B Direct Debit?

SEPA Core is used to collect consumer payments, and payment processing takes two to five business days. SEPA B2B is designed for business payments and has faster payment processing.

5. How can SEPA help me expand my business internationally?

SEPA simplifies euro payments across markets within the eurozone. You can reduce checkout friction and drive higher conversion rates by offering a localized, trusted payment method like SEPA. You also get to simplify recurring payments and collect them at lower costs. With Airwallex, you can expand into the eurozone with SEPA Direct Debit and other local payment methods, while managing other financial operations, from foreign exchange to payouts, on a single platform.