SEPA Credit Transfer: simplified payment for European companies
The SEPA credit transfer has become a standard international credit transfer between the countries of the so-called SEPA zone.
SEPA transfer and SEPA direct debit, what is the difference?
SEPA Transfer and SEPA Direct Debit are both payment methods for financial transactions within SEPA. But they should not be confused with each other, the difference between the two is the ordering party.
SEPA Credit Transfer (SCT) is initiated by the debtor, i.e. the person who sends the money. It is a payment method commonly used by companies to pay their employees or suppliers. The SEPA credit transfer has become the most widely used means of payment in Europe by companies, particularly to pay their employees or suppliers. And for good reason: it is simple to order, quick to carry out and offers many other advantages.
SEPA Direct Debit (SDD) is requested by the creditor and executed after agreement of the bank account beneficiary to be debited. It is also considered as a means of invoicing and is very interesting for companies, especially for invoicing subscriptions or regular operations. It allows them to reduce payment delays: companies know the payment date and can then optimize their needs in working capital requirement.
How to make a SEPA transfer?
You can only make a SEPA transfer to a bank account in a SEPA member country.
All SEPA transfers are in the same currency: Euro.
Besides that, SEPA transfer is similar to a non-SEPA international transfer. You must have the following information to make one:
- Details of the account to be debited
- Beneficiary account details: IBAN and BIC code (optional)
- Amount of the transfer
- Date of execution of the transfer
To make a SEPA transfer, you must give the order to your bank, from your personal banking space or from a cash management software like Iziago.
What are the SEPA transfer advantages?
SEPA transfer offers many advantages, the main ones are:
- Free most of the time, or very cheap, depending on your bank
- Fast execution: only 1 working day upon receipt of the order by the bank, compared to 5 working days on average for a non-SEPA international transfer
- No limit on the amount
- Secure order remittances in .xml format, standardized according to ISO 20022 rules
Since 2018, it is also possible to make instant SEPA transfers.
How to make an instant SEPA transfer?
Since november 2018, it is possible to make instant SEPA transfers: the funds are transferred to the beneficiary’s bank account in less than 10 seconds.
Most banks now offer this service but often it is more expensive than a standard transfer. Accessibility and cost (on average 1 euro per transaction) depend on each bank.
The main advantage of this payment method compared to traditional SEPA transfer is its rapidity. Moreover, it can be done 24 hours a day, 7 days a week, so there are no more cut-offs or non-working days to take into account.
However, this type of transaction has some limitations. European legislation limits it to a maximum amount of 100,000 euros per order since January 1, 2020, it was previously limited to 15,000 euros. Please note that banks are free to set lower limits.
How to contest a SEPA transfer?
It is possible to contest a SEPA transfer and to request a return of funds. This is called a transfer recall.
This approach only applies in certain specific cases and under certain conditions:
- In case of a technical error
- If the transfer is made more than once
- In case of proven fraud
Recall in case of fraud is possible but very complicated. It is only possible if the beneficiary’s account has the necessary funds. Most of the time hackers send the money through a multitude of accounts or make sure to transfer it quickly outside the SEPA area. Sometimes, depending on the county legislation to which the money has been sent, the beneficiary’s consent is required to make the recall.
Simplify your payment orders creation with Iziago
If you use Iziago’s payment solution, you get an additional advantage: creating your transfer orders is easier and faster. Iziago offers you the possibility to create a personalized database for your third parties:
- Creation by entry or by import
- Classification by third party groups (employees, suppliers, customers, miscellaneous)
- Partitioning and access controlled by user
It also allows you to register and re-use recurring orders, such as salary payments, or to assign a common wording to all orders of the same third party group.