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What Is Instant SEPA?

Most consumers nowadays expect to be able to make and take instant card payments, to and from their family and friends. For many businesses, however, the reality has been different, with payments, in the form of invoices and bills, still taking days to settle. Incompatible systems, high fees and complexity all add to the problem.

SEPA instant payments: A fast cross-border payment solution

To help create a better solution for businesses, individual European countries like Germany, the UK and Norway, decided to create their own, better payment solutions. Faster Payments, for example, offers businesses a way to transfer and receive funds, in real-time, within the UK.

However, while national payment systems helped businesses make seamless domestic payments, cross border payment transfers still remained problematic.

This is why the SEPA (Single Euro Payment Area) was created.

SEPA was the first important step in connecting Europe’s banking system, facilitating faster and more efficient payment between European banks. Now there’s Instant SEPA, a pan-European network that enables instant bank transfers across Europe. Instant SEPA allows payment providers that sign up to the SEPA instant banks system to perform close to instant transfers, across Europe.

What are SEPA instant payments?

SEPA instant payments enable euro transactions to take place in just seconds, at all times of day and night. Unlike with most other payment systems, the speed of payment doesn’t depend on an individual payment provider’s own clearing and settlement capabilities. As long as they are signed up to Instant SEPA, transfers should happen in close to real-time, or in less than 10 seconds.

How does SEPA instant credit transfer work?

Banks usually process their credit transfers in batches. They place these batches into a “big batch”, before submitting them for clearing and settlement, at the end of each business day. With Instant SEPA, payments take place on a transaction level. All payment providers who use Open Banking can recognize a SEPA transaction as an instant payment, so they can process it and clear the funds in real-time.

GoCardless is an example of a payment provider that uses Open Banking to help customers reduce international barriers. Customers have the ability to collect payments in more than 30 countries, from one single UK bank account, with all payments settled in home currency.

The importance of SEPA Instant

The launch of the European SEPA SCT instant system is an important milestone towards creating real-time, cross border payment services between participating banks. UK businesses can take direct debit payments via SEPA Instant from their customers in Europe, and have payment settled in their UK bank accounts.

This saves businesses the hassle of having to open countless individual bank accounts in order to facilitate payments across borders. With SEPA Instant, businesses can receive their foreign currency payments in real-time conversion rates too, for added transparency.

SEPA instant credit transfer is useful for individual person-to-person transactions, too, as well as person-to-business payments, in all kinds of environments and industries.

The benefits of SEPA Instant payments

  • Transaction amounts of up to 100,000 euros for instant transfers.

  • Speed of transaction with the vast majority of transactions completed in under 5 seconds.

  • Availability, with transactions executed in real-time, 24/7.

  • Flexibility: SEPA instant banks payments can be initiated irrespective of the payment provider’s clearing or settlement arrangements. SEPA Instant can be used via payment card, via direct debit, or for SEPA instant credit transfer.

The future of SEPA Instant payments

Many European payment providers have joined the scheme already. The combination of convenience, trust and functionality looks certain to see fast adoption of SEPA Instant in the years to come.

We can help

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.

Easily collect payments from your European customers without the need for complicated legal and financial paperwork. Save time and stress as GoCardless makes getting paid from Europe super-simple and hassle-free.

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