SEPA payments 101 - The Basics About The Single Euro Payments Area

Single Euro Payments Area (SEPA) is the European Union (EU)’s digital cash and payment system. This is an electronic transfer mechanism for making cross-border payments in euro.

With SEPA payments (The Single Euro Payments Area), customers can complete payments in Euro currency without cash, through direct credit and debit transfers to any location in the European Union and certain countries outside the EU, swiftly, safely, and effectively. The integration of SEPA payments has contributed to the overall efficiency and competitiveness of the European economy by erasing the distinction between international and cross-border payments by harmonizing standards in all member nations. DNBC Financial Group wishes to present information about SEPA to support our customers learn the outstanding features and usefulness of SEPA payments.

The single euro payments area - SEPA

History of SEPA

SEPA's narrative began in 1999, when the payment sector argued, through Euro l Bank, that a monetary union should include a single payments region. According to this viewpoint, the formation of the single euro payments area will result in deeper economic integration inside the EU. However, the European Union did not enact the Payment Services Directive until 2007. The directive laid the legal groundwork for the establishment of a Single Euro Payments Area.

SEPA payments replaced national payments in 2011. In 2017, SEPA launched a program that allowed participating banks to transfer up to 15,000 euros in 10 seconds.

In 2018, the European Commission proposed extending laws to prohibit banks from charging additional fees for cross-border transactions to non-EU countries. According to the laws, everyone in the EU has the right to move euros across borders for a price equivalent to that of a local transaction. The new legislation also compels customers to receive notification of the cost of a currency conversion before making international payments in a currency other than their native currency.

SEPA member states

SEPA mainly consists of:

• 27 Member States of the European Union (EU)
• 3 countries of the European Economic Area (EEA)
• 6 non-EEA countries, to which the geographical scope has been extended

EU/EEA SEPA Countries	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 SEPA Countries	Andorra, Monaco, San Marino, Switzerland United Kingdom, Vatican City State
Non-EEA Territories	Saint-Pierre-et-Miquelon, Guernsey, Jersey, Isle of Man

About SEPA payments

What is SEPA payments?

SEPA's purpose is to improve cross-border payment efficiency and to merge formerly fragmented national markets of euro payments into a single domestic market. With the use of a single bank account and a single set of payment tools, SEPA allows customers to make cashless euro payments to any payment account and anywhere as long as they are inside SEPA's supported territory. People who own a bank account in a eurozone country can use it to receive salaries and payments throughout the eurozone even when they move to a different nation for work.

Payments in currencies other than the euros will not be covered by SEPA in which domestic transactions in SEPA nations that do not use euros will continue to be made in native currencies. Other cross-border payments made via SEPA will be converted into euros, with a greater exchange fee than in eurozone nations.

What is an IBAN numbers?

IBAN ( International Bank Account Number). This is an international account code established by the International Organization for Standardization (ISO) and the European Committee for Payment Standards to facilitate international transactions and eliminate errors during money transfers.

The IBAN consists of a code that identifies the nation in which the account is located, the account holder's bank, and the account number. IBAN simplifies and expedites the processing of cross-border payments. IBAN numbers were solely used for international money transfers between European countries. IBAN, on the other hand, is trusted by many countries around the world because of its convenience and accuracy. 

Structure of The IBAN Code

IBAN structure includes Country Code, Check Number, and BBAN in which

• The Country Code consists of two letters, the first 2 digits (DE) indicate the country code. For example, DE stands for Germany, FR (France), ES (Spain).
• Check Number: 2-digit test code ranging from 00 to 99 (only code to check).
• Basic Bank Account Number (BBAN): Contains up to 30 country-specific alphanumerics. BBAN is further subdivided into three parts, which are as follows:
  • Bank Identification Number: It is a one-of-a-kind identification code used to identify the IBAN account holder's bank. It is the first four digits of a BIC code (Bank Identifier Code). Any branch of the same institution, regardless of geographical location, can also be represented by the same bank code.
  • Sort Code: a six-digit number used by the British payment sector to identify the bank and branch where the account is stored.
  • Account Number: An 8-digit number that identifies the specific customer's account to which funds should be transferred.

Why Choose IBAN

OPTIMIZING PAYMENTS	Minimizing payment rejections and the costs of repair and recapture. Reduces unsuccessful payments and bank fees, saving time and money. Ensures that proper information is entered, eradicating mistakes and typos, and improving registration. Avoid payment mistakes and bank fees.
SAVE TIME	You will save time and resources by automating payment validation and bank data retrieval prior to payment processing.
AUTO-COMPLETION	Improve users' experience by auto-completing bank details for your clients, such as BIC code and bank name, at the point of submitting their bank details.

SEPA payment systems

SEPA credit transfer

SEPA Credit Transfer is often used for one-time transactions and employs the IBAN (International Bank Account Number). On occasion, the BIC (Business Identifier Code) numbers are applied by both the sender and the recipient to shift money from one account to another. Once a transfer has been authorized, the beneficiary typically receives their funds within one business day of the payment transaction.

Assume you wanted to transfer €1000 from your Spanish bank account to a friend's bank account in France. Because both countries are part of the SEPA region, this transaction would function similarly to a domestic transfer using the SEPA credit transfer. To begin, your Spanish bank would deduct €1000 from your SEPA account. The €1000 would then be deposited into your friend's bank account by their French bank within one business day by using the IBAN—and, if necessary, the BIC—numbers to find the correct bank account.

SEPA instant credit transfer

The SEPA Instant Credit Transfer, often known as the SEPA Instant Payment, was launched in November 2017. And, as the name implies, the SEPA Instant Credit Transfer is all about speed. When a sender confirms a SEPA Instant Credit Transfer, the funds might be in the recipient's account in less than 10 seconds. This is due to the fact that SEPA Instant Credit Transfers employ direct routing from the sender's bank to the recipient's bank, with no middlemen involved. However, to use the SEPA Instant Credit Transfer, both the sender and the receiver’s banks must be registered as SEPA Instant members.

SEPA payments perks

SEPA is one of the best ways to transfer money internationally. Here are outstanding elements that make SEPA better to traditional payment methods:

• Paying with euros across Europe is a premium feature of the SEPA account. It is simple and convenient to make a payment. The SEPA network is extensive, and various services are available, including SEPA Instant Credit Transfer, SEPA Direct Debit Transfer, and SEPA Credit Transfer.
• Users can make payments from any SEPA-registered bank account. The payment must include a valid IBAN (International Bank Account Number) or a valid BIC (Bank Identification Code). Furthermore, each participant to the transaction is charged separately by their individual banks, and there is no maximum payment amount.

Open SEPA account with DNBC Financial Group

DNBC Financial Group is a reputable fintech unit in which many businesses around the world have placed their trust and become partners. Individuals and businesses have relied on us for all their payment options. We support the opening of personal and business accounts with customer service available 24/7. All operations are completed online. DNBC Financial Group offers two methods of cross-border payment: SEPA payments and SWIFT payments. SEPA payments are for businesses scale in EU countries, and SWIFT payments are for businesses scale globally. The website and mobile money transfer apps, which are constantly being optimized and updated by DNBC Financial Group are available to make such transactions effortless to manage.

How to open an account

Personal Account & Business Account:

How to make SEPA payments?

For international transfer via SEPA systems

• Step 1: Login at https://www.dnbcnet.com/
• Step 2: Select “Transfer to other local EU banks” on “FAST ACCESS”.
• Step 3: Fill in transaction information:
  • Beneficiary information
  • IBAN number
  • Upload supporting documents
• Step 4: Check information and confirm fees
• Step 5: Send payment order

ABOUT US

DNBC Financial Group holds all rights to the Payment Institution License issued by the Central Bank of Lithuania. We are authorized by the Bank of Lithuania to conduct Financial Activities specified in our License. DNBC Financial Group became the trusted choice in terms of SWIFT and SEPA Transfer for individuals and businesses around Europe and over the globe with digital payments and remittances. Individual clients can also use Payment Mastercards for online payment or withdraw cash at a global ATM with the logo Mastercard…

Mastercard is a registered trademark, and the circle design is a trademark of Mastercard International Incorporated, meaning that the Card could be used wherever Mastercard is accepted.

"DNBC FINANCIAL EUROPE" UAB

• Lvovo str. 25, Mažoji bure, 15th floor, LT-09320, Vilnius, Lithuania.
• https://www.dnbcf.com/
• [email protected]
• +370 5 240 5555 (24/7 Hotline)
• +370 6186 1961 (WhatsApp/ Viber/ Signal/ Telegram)