Sending money across international borders has become daily practice for the majority of modern businesses. But, as anyone who's tried it knows, international transfers can be complicated, slow, and expensive. Enter: SEPA transfers - a game-changer for Europe-wide cross-border payments!
This guide will walk you through everything you need to know about SEPA transfers from the basics to the benefits, and will show you how you can make SEPA transfers quickly and easily with your wamo business account. Let's dive in!
What is SEPA?
Understanding the Single Euro Payments Area (SEPA)
SEPA, or the Single Euro Payments Area, is an EU initiative, designed to simplify EUR bank transfers. It makes cross-border payments within the SEPA zone (more on that below) as easy as local transfers. Whether you're paying suppliers in France or sending money to friends in Spain, SEPA makes payments smooth.
The history and purpose of SEPA
SEPA was created by the European banking and payments industry, with the support of national governments, the European Commission, the Eurosystem, and other public authorities. It's essentially a payment network, established at the same point the euro was designated as the Eurosystem's single currency.
Before SEPA, cross-borders payments were generally slow and costly, because each country had its own banking system. This inconsistency meant a lot of laborious admin hid behind every international transaction.
With the introduction of SEPA, the EU created a single market for EUR payments, boosting trade and economic integration, and simplifying business transactions for everyone in the SEPA zone.
Key benefits of SEPA transfers for businesses and individuals
One of the biggest benefits of SEPA transfers is the standardization of bank account information. With a single IBAN (International Bank Account Number) and BIC (Bank Identifier Code), you can now send and receive payments across the SEPA zone without needing multiple bank accounts.
SEPA also reduces transfer times and costs, as the entire system is consistent and aligned, making it an attractive option for any payment.
How do SEPA transfers work?
SEPA transfers work much like domestic transfers. You begin a transfer through your bank’s online platform with the recipient’s IBAN and BIC. The money is then transferred from your account to the recipient’s account, usually within a single business day.
SEPA vs. SWIFT: what’s the difference?
SEPA is used for euro-denominated payments within Europe, but SWIFT is a global network for international payments.
SEPA transfers are typically faster and cheaper than SWIFT transfers because they're confined to the SEPA zone and don't involve as many intermediaries.
Types of SEPA Transfers
#1. SEPA Credit Transfer (SCT)
SEPA Credit Transfer is the most commonly used SEPA payment method. It allows you to transfer funds to any SEPA zone bank account, and the money usually arrives within one business day. The speed of a SEPA Credit Transfer makes it ideal for when you need to make single, or recurring, payment across Europe.
#2. SEPA Core Direct Debit (SDD)
SEPA Direct Debit is a convenient way to collect payments from customers within the SEPA zone. Once authorized, the payment is automatically debited from the payer’s account on whichever date they specified. This method is perfect for subscriptions, memberships, and other recurring payments.
#3. SEPA Instant Credit Transfer (SCT Inst)
When you need to move money fast, SEPA Instant Credit Transfer is the way to go. It allows you to send funds in real-time, 24/7, and the money will arrive in the recipient’s account within seconds. It’s perfect for urgent payments and business emergencies.
#4. SEPA Business-to-Business (B2B) Direct Debit
The SEPA Business-to-Business Direct Debit functions the same as the SDD, but it's specifically for B2B payments. It helps businesses streamline their payment processes with minimal admin hassle. It's ideal for large companies looking to manage recurring business transactions.
SEPA Member Countries; who is in the SEPA zone?
List of SEPA member countries:
SEPA encompasses a broad range of countries, making it a powerful tool for anyone dealing with European payments. Here’s a breakdown:
- All EU Countries are in the SEPA zone: Austria, Belgium, Bulgaria, Croatia, Cyprus, Czechia, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, and Sweden
- Non-EU SEPA Countries: Switzerland, the UK, San Marino, Vatican City, Andorra, Monaco, Iceland, Norway, and Liechtenstein
- Territories and dependencies: Guernsey, Jersey, the Isle of Man, Gibraltar, Martinique, Guadeloupe, Réunion, Mayotte, Saint Pierre and Miquelon, French Guiana, Azores, Madeira, the Canary Islands, and the Åland Islands
Expanding SEPA
As modern finance continues to evolve, so does SEPA. New territories, regions and countries may potentially join in the future, further simplifying international payments and making global business even easier.
SEPA payment timelines and costs
How long do SEPA transfers take?
Most SEPA Credit Transfers are processed within a single business day, and SEPA Instant Credit Transfers are processed within seconds.
Are SEPA transfers free?
SEPA transfers are generally low-cost, or even free, depending on your bank or payment provider. Some banks may charge a small fee though, particularly if currency conversion is involved.
At wamo, we believe in transparency and affordability for all. That's why our SEPA transfers are designed to be as cost-effective as possible, with absolutely no hidden fees. Whether you're sending or receiving payments, it's easy and affordable to manage your finances across Europe with wamo.
Comparing SEPA transfer costs across banks
Transfer costs vary significantly by bank. Some banks offer SEPA transfers for free, but others charge fees, and those fees will add up if you're making international payments all the time. Taking the time to understand costs and compare options will save you money in the long run.
Traditional banks vs. digital banks
Traditional institutions generally charge higher fees that digital banks, not just for SEPA transfers but across the board.
They'll often charge a higher SEPA fee is the transfer involves currency conversion, or if you've chosen an express processing service. For European legacy banks, this charge is generally anywhere between €1 and €5 per payment.
While €5 a payment doesn't seem like much, if you're making and taking hundreds of international payments a month, that can quickly become a substantial expense.
Digital banks and modern fintech providers tend to offer more competitive rates. These platforms often operate with lower overheads compared to a traditional institution, and those savings get passed onto their customers.
Digital banks also usually have a more transparent fee structure, so you know exactly what you’re paying for. Traditional banks might not deliberately hide this information, but it's certainly harder to get your hands on if you need to go into a branch, or wait in a call queue, to get your questions answered.
wamo vs. other digital banks
wamo has always stood out for our highly competitive pricing, and our SEPA transfer fees are no different.
Unlike some digital banks that offer lower transfer fees, compensated by charging higher account fees, or limiting the number of free transactions you can make, wamo offers minimal costs across the board.
- No hidden costs: wamo’s SEPA transfer costs are straightforward, with no hidden fees on currency conversion or urgent processing to surprise you later.
- Low transaction fees: Our SEPA transfers cost €0.99 per transaction, making us one of the most cost-effective options on the market.
- Competitive FX: If your SEPA transfer involves currency conversion, wamo provides competitive exchange rates, to get you the most value for your money.
- Bundled with Other Services: With wamo, you’re not just getting affordable SEPA transfers; you’re also gaining access to a suite of business tools, including multiple sub-accounts, expense tracking, and instant transfers, letting you manage all your business finances in one place without having to juggle multiple platforms.
wamo's the smart choice
For businesses, the cost of managing finances isn't just about transfer fees. It's about the overall value you get from your account provider. wamo provides not competitive SEPA transfer fees, and also gives you loads of business-boosting features designed to streamline your finances.
Open a wamo account today and discover how you can save on SEPA transfers while enjoying a full suite of business banking services.
How to make SEPA payments
Making a SEPA Transfer
Gather all the necessary details, including the recipient’s IBAN and BIC. Double-check these details to prevent delays or transfer errors. Then follow these steps:
- Log in to your online banking platform or payment provider
- Select the option to make a SEPA transfer
- Enter the recipient’s IBAN and BIC
- Specify the amount and currency
- Review the details and confirm the transfer
Setting up an SDD for your business
Setting up SDD is easy, and will streamline your payment collection process. With wamo, you can easily set up SEPA Direct Debit to automate recurring payments, making it easier to manage your cash flow. To set up a SEPA Direct Debit, follow these steps:
- Create an electronic or paper mandate that contains all the details of the direct debit. This mandate is the form your customer needs to fill out to give you permission to pull money from their account. It should include all their personal details, plus their IBAN.
- Once your customer has filled in the mandate, signed it and returned it to you, you must send it to their bank to inform them that you'll be collecting a payment. You may submit this to the customer's bank as an XML file containing all the relevant information. This file must be submitted each time you request another payment, a process you can outsource to a payment service if needed.
- Once the customer's bank has confirmed receipt, your SDD will be active and can pull payments from the customer's bank.
While an SDD is convenient and reliable, it’s essential you manage mandates carefully and ensure that all authorizations are correctly processed to avoid any disputes.
SEPA Transfers for Businesses
Why SEPA transfers are essential for European businesses
For European busineses, setting up SEPA transfers is a must. They simplify cross-border transactions, reduce costs and ensure quick payment processing.
How SEPA supports cross-border trade
SEPA supports cross-border trade within Europe by providing a reliable and cost-effective way to manage payments. This is particularly important for SMEs looking to expand their reach across the continent, as it means you can scale internationally without worrying about overheads.
And an intuitive platform like wamo makes it easier than ever to do just that. Handle any SEPA transfers without hassle, whether you’re sending or receiving payments, all from the wamo app.
FAQs
What happens if a SEPA transfer fails?
If a SEPA transfer fails, the funds are typically returned to the sender’s account. Common reasons for failure include incorrect IBAN/BIC details or insufficient funds. Contact your bank or provider to resolve these issues quickly.
Can SEPA transfers be reversed?
Yes, most SEPA transfers can be reversed under certain conditions, such as when a payment is unauthorized or made in error. However, the reversal process can vary depending on the circumstances, so it’s important to act quickly.
The only SEPA transfer that's irreversible is the SEPA B2B Direct Debit. The only times a SEPA B2B Direct Debit is eligible for refund or chargeback is if the payment was unauthorized or otherwise fraudulent.
How do I track a SEPA transfer?
Most banks and payment providers offer tracking for SEPA transfers, allowing you to monitor the status of your payment. With a wamo account, for instance, you can easily track your transfers in real-time through the app or online platform.
Why are SEPA transfers easier with wamo?
Managing SEPA transfers is a breeze with the right tools. A wamo business account simplifies the transfer process with our intuitive platform, making it easier for you to handle all your European payments. You get access to fast and secure SEPA transfers, along with a host of other features designed to streamline your business finances, all without ever leaving the wamo app.
Open a wamo business account now and experience the convenience of hassle-free SEPA transfers.
