The Single Euro Payment Area, or SEPA, is a payment area covering all the member states of the European Union plus Iceland, Liechtenstein, Monaco, Norway and Switzerland that allows private and corporate customers and public sector institutions to initiate and receive electronic payments in euros without differentiating between cross-border and domestic payments. This means that payments in euros to any European Union country are domestic payments in terms of speed and price, though it should be noted that when payments are made to another country, the costs of the transfer should be shared i.e. the payee and payer each pay the fees charged by their own bank. SEPA is intended to make payment solutions for all European Union residents, companies and institutions simpler, faster, safer and cheaper for consumers and companies, so all that will be needed is a bank account and payment card based in one country. This helps in promoting further European integration.

SEPA and its euro payments need everyone to have the same

The migration to SEPA has brought about several changes. Since 1 February 2014, everyone in Estonia has had to use their 20-digit international bank account number (IBAN). At the same time the domestic direct debit system has been stopped and it has been replaced by e-invoice standing orders. Large companies that make bulk payments had to update their databases and their business and accounting software to fit with the ISO 20022 XML messaging format.