It is a well-known truth that payments and online money transfers in Europe were pricey as well as all around the world. Besides paying a fee for sending, medium banks used to cut a big part of the whole amount. These fees and costs were slowing the financial movement in the zone but also frightening the entrepreneurs who are intending to set up a business. Monitoring the issue and adding the motto of “United in diversity”, the European Union came up with a revolutionary idea for its residents. To improve common financial instruments, standards and lower the transfer fees and costs, a new complete scheme was shaped. SEPA!
What is SEPA?
SEPA (Single European Payment Area) is a great success to ease international payments in the Europe line. Institutions in Europe finally took a deep breath after struggling with the exhausting extra charges for years. The facilitation triggered the circulating money flow and the European Economy gained a visible acceleration. We can show SEPA payments as one of the reasons for the strength of the union today. Today, SEPA transfers enable both businesses and people to send/receive fast, trustworthy and local-like cross-border money transfers. Since the introduction of the SEPA payment method scheme in February 2014, millions of residents in all participating countries are benefiting from the ease and functionality.
How does SEPA Work?
At this point we will view the differences between schemes of SEPA payments. These schemes are:
-The SEPA Credit Transfer : SCT (SEPA Credit Transfer) can be defined as an online payment method denominated in Euro between two bank accounts in the Eurozone network. By 2020, SEPA has become the preferred way to pay across Europe.
You can not handle your SEPA money transfers manually either with the help of a bank official or by yourself such as via a digital wallet app. Cash flow is transferred between Originator Bank and Beneficiary Bank.
-The SEPA Instant Credit Transfer : SCT Inst (SEPA instant) is a successful credit transfer mechanism delivering bank transfers in Euro within the blink of an eye.
-The SEPA Direct Debit: Being one of the most used schemes of SEPA, this is a pre-authorized SEPA payment method which automatically gets deducted from the account on a pre-decided date. As you may understand, it is used to pay taxes, loans, credit cards, utility bills, rents and other monthly ongoing services. Thanks to SEPA Direct Debit, users can not miss a payment deadline such as unpaid taxes and water bills.
Are SEPA Transfers Free?
According to the EU regulations, in fundamentals, transfers between two SEPA banks must not cost more than a domestic money transfer. But some countries such as Spain, Italy and Bulgaria still have serious issues about setting SEPA costs by adding extra charges for your incoming money flow. However, in general, a SEPA transfer costs €1 flat fee via your mobile phone.
In conclusion, the existence of SEPA payments opened a spectacular path for both individuals and businesses in the Eurozone. Not only the reliability but also speed of the SEPA money transfers are satisfying. A general time frame of a SEPA transfer takes 1-2 business days. But in most cases, the amount arrives in the beneficiary bank the next business day. Furthermore, “How to make a SEPA payment?” is a pretty simple process. Just go to your mobile banking and operate your transfer using the IBAN and names of the beneficiary. The whole system works so seamlessly that it would be unfair not to appreciate the original genius team behind this epochal initiative.