What is SEPA (Single Euro Payments Area)? - Ikajo Glossary


SEPA - Single Euro Payments Area

SEPA (Single Europe Payments Area) is the remittance transfer payment system created by the European Union. It simplifies cashless payment transact in the euro countries. The main goal of the single euro payments area (SEPA) initiative is to provide inexpensive and easy cross-border electronic payments within European Union areas. SEPA currently functions in 36 countries. It encompasses the 28 EU member states. SEPA also operates in Iceland, Norway, Liechtenstein, Switzerland, Andorra, Vatican City, Monaco, and San Marino.

SEPA - Single Euro Payments Area

Who uses SEPA?

Take a look at the list of primary users of SEPA architecture:

  • European consumers;
  • European businesses owners;
  • Government agents who make payments by direct debit/ instant credit transfer/ credit transfers.

Can I, as a merchant, accept SEPA as a payment method on my website?

Yes, you, as a merchant, can accept payment on your website via SEPA. You need to ask a PSP of yours to provide such an option. Keep in mind that SEPA only allows euro transfers, which makes it useless for American companies. The main benefit of SEPA is that American Financial Services have no control over it. It gives SEPA users more financial freedom. The payment processing fees of SEPA are high. However, they are beneficial for those merchants who receive large sums (thousands of dollars and more).

What are the disadvantages of SEPA?

  • The payment transfer takes up to three days. The benefit is, you get the natural money straight away and don’t need to convert them. However, for those merchants who need to ship their products immediately, such an option won’t work.
  • The transaction fees are high. That makes SEPA unfavorable for small businesses or dropshipping companies.
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