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What are the different types of SEPA payments?

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As the Global Payment Partnership Lead for SEPA Laura and her team manage the relationship with GoCardless' partner banks for the European SEPA scheme, ensuring current and future banking partners can deliver what GoCardless needs to serve merchants in the best way possible. As the Global Payment Partnerships Lead Laura has developed in-depth knowledge of SEPA and how GoCardless works with the scheme, becoming the resident expert on SEPA. ConnectSee full bio

Last editedApr 20232 min read

You’ve conquered the UK market. And now, hungry for growth, you’ve set your sights on international markets. But with international expansion comes a new set of logistical and financial problems – such as receiving payments from international customers in a fast, secure and affordable way.

If you have your sights set on trade within the EU, you may worry about the impact that Brexit might have on facilitating trade with EU member states. But SEPA payments could be just the solution you need to trade effectively with customers on the continent. Here we’ll look at the different types of SEPA payments, so you can determine which is best suited to your business model.

Read about the business benefits of collecting SEPA payments via GoCardless.

SEPA payments explained

The SEPA (Single Euro Payments Area) is a network that spans the European continent. It allows businesses to send and receive payments in euros with bank accounts within the eurozone.

SEPA is designed to make sending money between European countries as easy as making bank transfers within the same country. SEPA payments can remove barriers to international trade, and build trust in your brand on foreign shores.

How to collect payments with GoCardless

1.

Create your free GoCardless account, access your user-friendly payments dashboard & connect your accounting software (if you use one).

2.

Easily set up & schedule one-off or recurring payments via payment pages on your website checkout or secure payment links.

3.

From now on you'll get paid on time, every time, as GoCardless automatically collects payment on the scheduled date. Simple.

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Can UK businesses make and receive SEPA payments?

In the wake of Brexit, you may wonder whether UK businesses are able to make or receive SEPA payments to countries within the EU. Fortunately, SEPA goes beyond the limits of the European Union. It extends to a total of 36 member states, only 27 of which are within the EU. Post-Brexit Britain can make and receive SEPA payments, as can businesses and customers in:

Norway
Iceland
Switzerland
Liechtenstein
Monaco
Vatican City
San Marino
Andorra

The UK’s break from the EU has no bearing on its SEPA membership. So you can continue to make and receive SEPA payments just as when the UK was an EU member state. However, following Brexit, merchants are now required to input more information into their payment file, making things a bit more complicated than previously. This additional complication does not impact on GoCardless merchants as we handle this extra requirement as part of our SEPA service.

Looking for an easy & affordable way to collect SEPA payments?

GoCardless saves merchants time, money & stress collecting SEPA payments.

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Three types of SEPA payment

There are three different types of SEPA payment. Let’s take a look at each, how they work, and what types of payments they’re best suited for.

1. SEPA Credit Transfer

The SEPA Credit Transfer (SCT) was first introduced in 2008 by the European Payment Council (EPC). The EPC is a non-profit organisation that represents different payment service providers (PSPs) and establishes standards for payments integration and development across the continent.

SCT is usually used for one-off transfers, while PSPs move payments from one bank account to another within the SEPA network. In order to do this, however, the PSP needs to be a formal participant in the SEPA scheme.

SCTs are processed in euros. The transaction uses the IBAN (International Bank Account Number) and sometimes the BIC (Business Identifier Code) to ensure that funds are correctly moved into the right accounts. Payments are usually received within one business day.

2. SEPA Instant Credit Transfer

As the name suggests, these types of transfers are best used when time is of the essence. Unlike an SCT, a SEPA instant credit transfer can move money from one account to another in less than ten seconds.

They’re also available 24 hours a day, 365 days a year, and completely immune to public holidays. So whenever you need to make or receive a payment, you can be assured that it will reach its destination quickly!

3. SEPA Direct Debit Transfer

These are, as you might suspect, best suited to recurring payments. They are a good fit for subscription services as well as monthly essentials like rent or utility bills. These are fundamentally different to SEPA credit transfers, as it is the recipient that requests the money transfer from the sender rather than the other way around.