What SEPA Transfers Are and How They Work

There are many online services and applications for international money transfers. SEPA is one of those payment systems.

In this article, we will discuss how it works and what SEPA payments are, exactly. We will also look at how this service differs from other international money transfer systems.

SEPA is a payment system designed for money transfers within the countries of the European Union. The abbreviation “SEPA” decodes as Single Euro Payments Area.

The service was launched in 2008. Initially, it was used exclusively in European countries. Since then, other states gradually joined the system.

SEPA was created to simplify transfers within the European Union, making the process faster and more convenient. A single standard was introduced for all transactions, allowing users in different European countries to transfer money to each other as quickly as if they were made within the same state.

The main features of SEPA transfers include:

There is also another important feature: money transfers are using one currency exclusively — euro.

SEPA bank transfers are available in all countries that belong to the Eurozone — the union where the euro is used as the official currency. The zone includes Germany, France, Finland, Belgium, Cyprus, and others. In total, there are more than 20 countries on the list.

In addition, SEPA operates in the EEA (European Economic Area). These are countries that aren’t a part of the EU but are entitled to participate in transactions within the European market. The EEA includes Iceland, Norway, Liechtenstein, Switzerland, and several other states.

If a non-resident user has an account in a European bank, they can also make SEPA transfers. This means the system is available not only to citizens of the EU and EEA but also to people in other countries. This opportunity is often used by foreign entrepreneurs doing business with European partners. They open an account in a European bank and use the SEPA system to settle payments with counterparties.

To send money via SEPA, you only need the BIC and IBAN details. BIC is the code of the bank where the money will be received. This information can be found in open sources: simply enter the bank’s name and branch address into a search engine. The necessary details should be published on the bank’s website.

IBAN is the international bank account number. The recipient should provide it. As it is personal data, this information cannot be found online. If the recipient has trouble sharing their IBAN, there are two options:

The easiest and fastest way to make a transfer within the European Union is to use a mobile banking application. You need to:

There’s no need to specify the BIC details. When the IBAN is entered in the application, BIC is retrieved automatically.

If the sender wants to transfer cash, they can visit a bank branch with their passport. Non-residents will also need to provide a document confirming their legal stay in the country. A bank employee will offer to fill out an application, accept the cash at the counter, and the funds will soon be available for the recipient to collect.

In most cases, the money reaches the recipient on the same day it is sent. The fee amount depends on the transfer sum (most oftenly there’s no fee, especially if the transaction is happening within the same country).

Another way to send money via SEPA is to use the services of intermediaries. In almost all European countries, there are exchange offices that can help transfer money to another country.

However, intermediary services are paid. The SEPA fee may be a fixed amount or a percentage of the transfer value. Those who transfer money through intermediaries should keep all financial documents. If any issues arise with the payment, receipts and slips will help confirm that the application was processed through that particular exchange office.

SWIFT is a financial messaging system. The system itself does not transfer money. It only transmits transaction messages between banks. All messages are sent in a unified, standardized format. More than 200 countries worldwide are connected to the SWIFT system, and in each of them, hundreds of banks work with the service.

Although SWIFT does not process payments, it is often conveniently referred to as an international transfer system. This is because, in practice, SWIFT allows money to be transferred abroad quickly and securely.

The more banks are involved in SWIFT transfers, the higher the fees and the longer the processing time. SWIFT is used for money transfers between individuals and legal entities.

With SEPA transfers, you can send money to individuals, make large settlements between companies and also provide payments for goods and services in European stores. Many merchants welcome this method, because SEPA transfers rarely involve fees, meaning businesses do not incur extra costs.

Sometimes, a user needs to quickly send money from Europe to another country, but SEPA is not suitable. For example, the sender needs to send funds in a currency that is not euros. Or the recipient does not have a European bank account, and banks in their home country are not connected to the system. In such cases, alternatives to SEPA come in handy.

One such solution is the Korona app. It allows sending money from Europe to dozens of countries. Its advantage over SEPA and similar services is that the transfer currency is not limited to just euros. The sender can choose from several currencies and even specify in which currency the recipient will collect the funds. This is convenient for countries where the euro is not the most popular currency. Typically, the money reaches the recipient within a few minutes.

All operations are completely safe and transparent. The user can check the status of the transaction at any time. If the sender changes their mind after creating the transfer or wants to adjust the amount, the refund or correction can be made in just a few clicks, provided the recipient has not yet collected the money. To send funds via Korona, there is no need to open a separate account. The service works with most bank cards issued by European banks.