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What is a SEPA Credit Transfer?

Rob Keating
Written by
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Last editedMay 20222 min read

If your business accepts payments from within Europe, it’s helpful to be aware of the SEPA credit transfer scheme. SEPA credit transfer makes it easier to transfer money from one international bank to another. So, what is a SEPA credit transfer exactly, and how does the scheme work? Here’s what you should know before transferring any euros across borders. 

What is SEPA?

The Single Euro Payments Area (SEPA) includes all 28 EU member states along with the four members of the European Free Trade Association:

  • Iceland

  • Liechtenstein

  • Norway

  • Switzerland

It also includes:

  • Monaco

  • San Marino

  • Andorra

  • United Kingdom

  • Vatican City State

  • Mayotte

  • Saint-Pierre-et Miquelon

  • Guernsey

  • Jersey

  • Isle of Man

SEPA is an EU initiative designed to make cashless payments easier throughout the Eurozone. Users can send and receive SEPA payments, transferring money between international bank accounts with the same ease as domestic bank transfers. The initiative can be used by consumers, businesses, and public administrations alike, provided that payments are sent in euros.

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What is the SEPA credit transfer scheme?

The SEPA credit transfer scheme (SCT) is simply part of the SEPA initiative, introduced by the European Payment Council in 2008. Under SEPA rules, there are three types of eligible cashless payments:

  1. Credit transfers

  2. Card payments

  3. Direct debit payments

SEPA credit transfers are typically used for one-time transfers. By contrast, SEPA direct debits are better suited for recurring payments. To send or receive a credit transfer, the service provider must be a SEPA participant. Transfers are processed in euros using identifying details including the applicable international bank account number (IBAN) and business identifier code (BIC).

What are the benefits of the SEPA credit transfer scheme?

  • It streamlines domestic and European bank transfers into a single system.

  • It facilitates faster and more secure cross-border payments with unified standards.

  • It enables citizens studying or working in one SEPA country to use existing accounts in their home country.

Can UK businesses send and receive SEPA credit transfer payments?

Brexit changes currently have no bearing on the UK’s involvement in the SEPA scheme. UK businesses can still send and receive SEPA payments, including credit transfers, to countries throughout the Eurozone.

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How do SEPA credit transfer payments work?

There are a few factors to keep in mind when setting up SEPA credit transfer payments. We’ve already noted the key criteria above:

  • The payment must be in euros

  • It must be transferred between banks in participating SEPA countries

  • The banks must be members of the SEPA credit transfer scheme

  • Payments of up to €1bn per transaction are permitted

Credit transfers are generally one-off payments, but they can be recurring payments, e.g. a standing order. They can also be single or bulk payments. For example, a single payment could be used by an EU-based customer to pay for services from a UK-based business. A bulk payment could be used by a UK-based business to cover multiple credits to EU-based employees.

SEPA credit transfer payments are processed in full for the original amount, without deductions. Any fees are added on and charged separately by the sender or recipient’s own bank.

  • To set up a transfer, you must enter the beneficiary’s IBAN and BIC numbers.

  • To receive a transfer, you must provide your business’s IBAN and BIC to the sender.

  • If you’re using a UK business account in GBP, the currency will automatically be converted into EUR.

SEPA credit transfers typically take one business day for processing. If you need to process the payment more rapidly, SEPA instant credit transfers move funds in under ten seconds. The cost will vary depending on the bank and whether a foreign exchange conversion applies. GoCardless is ideal for sending and receiving international payments. We provide pull-based payments for businesses globally, enabling cross-border payments at the real exchange rate.

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GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.

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