What is SEPA?
SEPA will standardise euro electronic payments across Europe. In total, there are 32 countries in the SEPA area. These are the existing 27 EU member states of the European Union, together with Iceland, Lichtenstein, Monaco, Norway and Switzerland.
The 27 countries of the European Union are: Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovenia, Slovakia, Spain, Sweden and the United Kingdom.
SEPA comes into full effect on 1 February 2014, changing the way euro electronic payments are processed across Europe. It will mean that you can make and receive payments seamlessly, collect a direct debit on any euro account or make a credit transfer to any euro account within SEPA.
What are the main changes that SEPA brings?
What will it mean for businesses?
From 1 February 2014, all euro direct debits and credit transfers within the designated 32-country area will be executed under the same conditions. This will create a more efficient borderless payment area by standardising euro electronic payments.
All businesses must be ready for SEPA, as all existing national systems will close on 1 February 2014. You will need to ensure that your pay-roll, direct debit and accounting systems are SEPA ready before 1 February 2014 so that you are able to make euro electronic payments after that date.
A key benefit for businesses is that faster settlement and simplified processes will improve cash-flow and potentially reduce cost.
How does SEPA Direct Debit work?
SEPA Direct Debit allows you to collect payments in euro from domestic and cross-border debtors throughout SEPA.
SEPA Direct Debit brings with it a number of important business changes:
How does SEPA Credit Transfer work?
SEPA Credit Transfer allows you to make euro electronic payments to domestic and cross-border beneficiaries in SEPA
Are you obliged to conform to SEPA standards?
Yes, EU regulation 260/2012 means that all businesses must conform to the new SEPA standards before the end-date of 1 February 2014.
What is the SEPA timeframe?
SEPA has been introduced on a phased basis. The rollout of SEPA credit transfer and direct debit capabilities began across the 32 SEPA countries in 2008.
By 1 February 2014, all existing national credit transfer and direct debit schemes must move to the SEPA credit transfer and direct debit payment schemes. At that point, IBAN and BIC codes will replace national sort codes and account numbers for all euro electronic payments.
Where can you find IBAN and BIC?
IBAN and BIC details are generally included on bank statements.
You will find a simple converter here which lets you input an account number and sort code and generate an IBAN and BIC.
What do you need to do now?
You need to contact your bank and software provider.
Your software provider will advise you when their software updates will be completed.
Your bank will be able to advise you on any actions that you need to take to make sure that you are fully SEPA-compliant in good time for the 1 February 2014 deadline.