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The Single Euro Payments Area, or SEPA, brings together providers and users of payment services from all the countries of the European Union, plus Iceland, Liechtenstein, Monaco, Norway, San Marino and Switzerland.

SEPA is intended to make payment services and solutions for all European Union residents, companies and institutions simpler, faster, safer, cheaper and more integrated, so all that is needed is a bank account and payment card from one country.

Since 1 February 2014, euro payments throughout Europe have been initiated using a single set of rules and standards. The migration was managed using the legal framework of the European Union (see the summary of the legal aspects of payment and the migration to SEPA).

There are now around 7000 banks and payment and e-money institutions that provide SEPA payment services, and they are used by over 500 million people in a total of 34 European countries. The system essentially uses four fundamental pan-European sets of rules and a supporting network of infrastructure.

  • The SEPA system for ordinary payments operates between all the banks and payment service providers operating interbank payments in euros. Interbank payments in euros usually reach the payee within 3-5 hours on working days, or on the next working day at the latest.
  • The new SEPA instant payment system operates between all the banks and payment service providers that have joined so far (see current status). Payments for less than 15,000 euros reach the payee within 10 seconds, 24 hours a day every day of the year.
  • The SEPA system for direct debits operates between all the banks and payment service providers that offer interbank direct debits.
  • The SEPA system for direct debits between companies operates between all the banks and payment service providers that have joined it.

The banks operating in Estonia do not offer direct debit services, and so they do not have to join the SEPA direct debit service. The domestic direct debit service was withdrawn on 1 February 2014, when the e-invoice standing order initiated in SEPA came into use.

The focus of SEPA is moving towards ensuring the integration of innovative pan-European payment solutions based on SEPA systems. A SEPA set of rules and infrastructure has already been developed for mobile payments for example, combining the IBAN and telephone number of the payee so that payments between different service providers can be initiated directly from a telephone’s contacts list. Ways to make better use of instant payments, e-invoices and electronic payment requests are also being sought, together with ways of moving towards open banking.

The constant development of SEPA, and indeed the whole payments environment across Europe, has been helped by the Euro Retail Payments Board (ERPB), which has operated since 2013 and is led by the European Central Bank. The ERPB works with central banks and market participants to agree on updating the payment environment and looks for ways of making current and new payment services and solutions more integrated.

The equivalent of the ERPB in Estonia is the Estonian Payment Forum, which is led by Eesti Pank.