Understanding SEPA: The Single Euro Payments Area

The Single Euro Payments Area (SEPA) is a transformative initiative by the European Union that allows individuals, businesses, and institutions to make euro-denominated payments across Europe as easily as domestic transactions. By standardizing payment systems, SEPA removes many of the barriers traditionally associated with cross-border transfers.

 

What Is SEPA?

SEPA, officially launched in 2008, aims to create a smooth payments ecosystem across Europe. It simplifies euro transfers between participating countries, ensuring they are fast, secure, and cost-effective.

The system is managed by the European Payments Council (EPC) and currently includes:

27 EU member states, three EEA countries (Iceland, Liechtenstein, and Norway) and the following non-EU countries (Albania, Andorra, Moldova, Monaco, Montenegro, North Macedonia, San Marino, Serbia, Switzerland, the United Kingdom, and Vatican City State). These countries can all make and receive electronic euro payments under the same rules.  

 

Why SEPA Was Created?

Before SEPA, sending money across European borders was often complicated and expensive. Transfers could take several days and involved varying fees and formats. SEPA was designed to:

• Eliminate differences between domestic and cross-border euro payments.
• Make cross-border transactions faster and cheaper.
• Standardize processes for improved efficiency.
• Strengthen the single European market.

SEPA transactions rely on standardized payment details, such as IBAN (International Bank Account Number) and BIC (Bank Identifier Code), which help ensure accurate and efficient processing of payments. Current transaction limit: €100,000 (subject to change depending on the bank).

Key Benefits of SEPA

• No cross-border barriers: Domestic and international euro payments are treated the same.
• Lower or no fees: Transfers are typically inexpensive or even free.
• Faster processing times: Many payments settle within seconds.
• Common standards: Use of IBAN and ISO 20022 XML ensures consistency.
• Support for businesses: Easier to operate and expand across Europe.

Important Condition

• SEPA only processes transactions in euros. If the recipient’s account is in another currency, the bank may convert the amount and apply a conversion fee.
• SEPA is not the same as SWIFT. While SWIFT supports global transactions in many currencies, SEPA is focused on the eurozone and offers faster, cheaper transfers.
• Real-time SEPA payments are becoming more common, enabling near-instant transfers across participating countries.

There are the key dates and details for the Balkan countries about joining the Single Euro Payments Area (SEPA):

• Albania and Montenegro: On 21 November 2024 was approved for SEPA scope by the European Payments Council (EPC). However, payment service providers (PSPs) could join schemes from April 2025; first cross-border euro transfers expected beginning 5 October 2025.
• North Macedonia: On 6 March 2025 was approved for SEPA scope by the European Payments Council (EPC). However, payment service providers (PSPs) could join schemes from April 2025; first cross-border euro transfers expected beginning 5 October 2025.
• Serbia: On 22 May 2025 was approved for SEPA scope by the European Payments Council (EPC). However, payment service providers (PSPs) could join schemes from November 2025; first cross-border euro transfers expected beginning May 2026.

Bosnia and Herzegovina: The banking/ payments authority (Central Bank of Bosnia and Herzegovina – CBBH) states that the legislative & regulatory framework does not yet fully meet the criteria for SEPA membership. According to a February 2025 update, the CBBH is coordinating preparatory activities: adopting the relevant EU payment-services regulations, infrastructure upgrades, etc. Current status: Not yet in the SEPA schemes’ geographical scope; no official application submitted.