If you conduct business on the European continent, you have definitely dealt with SEPA transactions. This money transfer service once revolutionized the payments landscape across a number of Euro and non-Euro countries by creating a unified network in place of a fragmented ecosystem.
While a variety of entities still use regular SEPA transfers today, there is a more modern alternative to it - SEPA Instant. This brief guide talks about the key differences between these two schemes and explains which one of them is more effective for your business.
SEPA was introduced in 2008 and fully implemented in 2016 as an initiative to optimize domestic and cross-border cashless transactions in the European continent. This goal was achieved by enabling European businesses, administrations, and consumers to initiate and receive credit transfers, bank card payments, and direct debits within a unified framework.
Thus, SEPA payments are financial transactions between parties located in the SEPA union member countries. They are performed with the use of IBAN numbers and can take up to 1-3 business days to reach the recipient.
This service began its operations in November 2017, shortly after the European continent was fully onboard with regular SEPA payments. However, to be able to make SEPA Instant transfers, both the sender’s and the receiver’s banks have to be connected to this scheme.
SEPA Instant is aiming to potentially encompass all member states, yet the coverage nowadays varies significantly from one country to another, ranging from 3% in Denmark to 100% in Slovenia1.
Besides, SEPA Instant transfers have a threshold of €100,000, while regular SEPA payments don’t have a limit.
Here are some insights into what BNPL regulations nowadays look like in some countries:
While most reputable BNPL providers globally stick to codes of best practice, there are fears of a brewing financial scandal. Thus, most major economies have begun building plans to regulate the provision of BNPL services.
There are several reasons why it is beneficial for businesses to become part of the SEPA Instant framework, namely:
With that said, if you are running a business in one of the SEPA-member countries, it is strongly advisable to consider switching to such instant payments for the sake of optimizing your company’s performance.
Implementing SEPA Instant in your operations already today by collaborating with entities that are a part of this framework, will provide you with a competitive advantage and prepare you for further developments in the real-time payments sphere.
1 - Truelayer - Open banking: why SEPA Instant payments need a nudge
2 - European Payments Council - SEPA Instant Credit Transfer Today