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What you need to know about SEPA


SEPA (Single Euro Payments Area) is ‘a joint integrated European payment service for sending and accepting bank transfers denominated in euro within the territory of the European Economic Area’. In FinTech, to be compliant and efficient, it’s crucial that you have all the right certifications and legal requirements. In short, SEPA enables more efficient transfer of money and payment within the European Union. 

This is important for your business because it allows you to accept a more efficient payment and transfer method. Being able to accept cashless payments will bring convenience to your client base that will make them more likely to transact again in the future. Examples of payment methods include debit card, direct debit, and credit transfer. Starting in 2012, European countries had to begin switching over to SEPA to make transactions efficient.  

The European Central Bank’s website shows how to become compliant, but there are a few items to consider when reviewing your compliance standards. SEPA infrastructures are based on 4 criteria, the first being processing capabilities. Infrastructures need to ‘fulfill the requirements of the relevant version of the European Payments Council’s SCT Rulebook.

The second criterion includes interoperability. It states that a direct link between retail payment systems implies that no intermediary exists between them. Furthermore, ‘To promote SEPA implementation, infrastructures are expected to provide full reachability for SEPA scheme participants.’

The third criterion is reachability, which can be achieved, ‘either through direct or indirect participants or through interoperability among infrastructures’. The final criterion is the choice and manner with which you implement this process into your business. The goal is to bring transparency of the pricing and fee structures of the core service. 

When starting any sort of business, whether it’s FinTech or retail, abiding by the payment processing standards of your governing body is crucial, otherwise fines and audit troubles could lie ahead. Along with becoming SEPA compliant, it’s up to you to ensure the transactions are secured and protected from outside forces that may try to steal the data. Also, it may be beneficial to visit your legal counsel to ensure your business complies with current laws and regulations. Here is a link to the penalties your business or company could incur if you fail to be SEPA compliant. 

Contact us today for help with getting certified for SEPA transactions! 

Arthur Shah-Nazarov