Credit transfers and direct debits in euro (SEPA)

Payment service providers (PSPs) carrying out credit transfers or direct debits in euro, may be subject to specific requirements under the SEPA Regulation.

The Single Euro Payments Area (SEPA) aims to make sure that European consumers, businesses and public authorities can make and receive payments in euro under the same basic conditions, rights and obligations.

The SEPA Regulation (Regulation (EU) 260/2012) (as onshored by the European Union (Withdrawal) Act 2018 and amended by the Credit Transfers and Direct Debits in Euro (Amendment)(EU Exit) Regulations 2018), sets out technical standards, conduct and information requirements for credit transfers and direct debits in euros.

The SEPA Regulation applies to:

  • PSPs that are reachable (see below) for euro payments
  • credit transfers and direct debits denominated in euros – as long as all the PSPs involved in the transaction are based in the EEA

Payments to which the SEPA Regulation doesn’t apply:

  • transactions not denominated in euro – including all sterling-denominated transactions
  • card payments
  • internal transfers within PSPs
  • most payments transmitted over large-value payment systems (eg, TARGET, or EURO1)
  • money remittance and e-money transfers where neither of the accounts involved is a payment identifiable by International Bank Account Number (IBAN)
  • own-account payments by, and payments between, payment service providers

What you must do 

If you’re a UK-based firm carrying out credit transfers or direct debits denominated in euros to an account in one of the SEPA countries, you need to make sure you meet the following requirements.

Message formats: firms must use the ISO 20022 XML for message formats in the interbank space. Payment service users who send or receive payments in batch files, and users submitting batch payment files, must also use this message format, except in the case of business to business payments where neither business is a micro-enterprise.
Business Identifier Code (BIC): firms must not make it a mandatory requirement for the payer or payee to provide the BIC to initiate a payment transaction. They should use IBAN instead.

Reachability: PSPs reachable for euro credit transfer or direct debit services at national level, must also establish European-wide reachability by being part of one of the EU-wide schemes.
Interoperability: firms must ensure they use euro payment systems, which are technically interoperable according to the standards developed by international or European standardisation bodies.

Multilateral interchange fees: firms must phase out per-transaction multilateral interchange fees (MIFs) for direct debits. Firms will be allowed to use MIFs on R-transactions (which include for example, rejected and recalled transactions) under certain strict conditions.

Consumer protection: firms have consumer protection obligations for direct debits (eg, the obligation, on a payer’s instruction, to limit, block or, where a right of refund is not available, to verify individual payments).

Payment accessibility: when making or receiving credit transfers or direct debits, users will not be allowed to specify the member state in which the payment account of their counterparty is located. For example, a utility company based in an EEA country would not be able to direct its bank to only accept direct debits paid from a bank account in its own country.

Establishing reachability

You must participate in one of the EU-wide SEPA schemes to be reachable for euro payments. More information about the schemes is available from:

You can find out more about the process and rules of adherence to the SEPA schemes from UK Finance. If you have questions about the adherence process, email [email protected]

The EPC maintains registers of all participants in SEPA payment schemes.

Transition to IBAN-only

UK Finance and Swift developed a SEPA IBAN-only Directory to help firms and consumers in SEPA countries get the correct BIC for a UK payee from their GB IBAN. The Directory can be accessed free of charge.

Our role and oversight of overseas branches

We are the competent authority overseeing SEPA compliance in the UK, and we have been given powers for this under the Payments in Euro (Credit Transfers and Direct Debits) Regulations 2012.

If you think you will have difficulty complying with your obligations, you should tell your supervisor as soon as possible.

If you have branches in other SEPA countries, the competent authorities designated by these countries will oversee branches’ compliance with these requirements. 

Reporting problems

We operate a dedicated SEPA compliance reports email address ([email protected]).

Our reports mailbox is open to everyone, including consumers, firms and representative bodies based in the UK or overseas. 

If you believe that a business we regulate is not fulfilling its obligations under the SEPA regulation, you should report this, along with details of the relevant incident(s). 

The Financial Ombudsman Service is the UK’s designated out-of-court redress body for SEPA-related complaints, and for payments-related complaints in general.

If you are dealing with PSPs (including branches of UK payment service providers) based in another SEPA country, report your concerns to the competent authority in that country and refer any complaints to the appropriate body there.

Page updates

25/04/2019: Link changed Updated EPC registers of all participants in SEPA payment schemes link