SEPA establishes a single set of tools and standards that make cross-border payments in euro as easy as national payments.
The single euro payments area (SEPA) harmonises the way cashless euro payments are made across Europe. It allows European consumers, businesses and public administrations to make and receive the following types of transactions under the same basic conditions
credit transfers
direct debit payments
card payments
This makes all cross-border electronic payments in euro as easy as domestic payments.
SEPA covers the whole of the EU. Other countries and territories which are part of the geographical scope of the SEPA Schemes are: Andorra, Iceland, Norway, Switzerland, Liechtenstein, Monaco, San Marino, United Kingdom, Vatican City State, Mayotte, Saint-Pierre-et Miquelon, Guernsey, Jersey and Isle of Man.
The advantages of a single euro payments area include
The SEPA project was launched by the European banking and payment industry represented by the European Payments Council (EPC). The EPC has designed the SEPA schemes for credit transfers and direct debits, and is developing a scheme for payment cards. It is also currently working on a new framework for mobile payments.
The European Central Bank (ECB) and the EU have also supported the SEPA process as follows.
The payment services directive 2007/64/EC lays out the legal foundation for SEPA.
The SEPA regulation (EU) No 260/2012 sets the rules and a deadline in February 2014 (later postponed to August 2014) for euro area countries to make credit transfers and direct debits in euro under the same conditions. It also contains arrangements for euro transfers in euros in countries outside of the euro area.
The regulation (EC) No 924/2009 on charges for cross-border payments in euro was also adopted in the context of SEPA. It requires banks to apply the same charges for domestic and cross-border electronic payment transactions in euro.
It was later amended by the SEPA regulation, which further integrates the market for payment services in euro.
The principle of equal charges both for national and cross-border payments applies to all electronically processed payments in euro, including:
Countries outside the euro area may also extend the application of this regulation to their national currency. Sweden and Romania have chosen this option.
In April 2018, the Commission presented a proposal to extend the benefits introduced by regulation (EC) No 924/2009 to consumers and businesses in non-euro countries. Under this proposal, all people in the EU will be able to transfer money cross-border, in euro, at the same cost as they would pay for a domestic transaction. The new rules will also require that consumers are informed of the cost of a currency conversion before they make a payment abroad in a different currency than their home one.