The Single Euro Payments Area (SEPA) is an initiative of the European banking industry with the aim of making electronic payments across the euro area as streamlined as domestic payments. SEPA is supported by the European Commission and the European Central Bank. SEPA Payments are subject to the Payment Services Directive (PSD).

A SEPA payment would therefore be national or international payment, for which the account of the remitter (the person sending the money, the sender) and of the beneficiary (the person who is receiving the money) are held in one of the 27 EU Countries or in Norway, Iceland, Liechtenstein, Switzerland and Monaco (all SEPA countries) and is denominated in euro.

Another characteristic of a SEPA payment is that it must meet the STP (Straight-Through Processing) criteria. This means that the payment instructions must contain the IBAN of the beneficiary bank. In addition, the cost instruction must be ‘SHARE’, meaning that the costs are shared between the sender and the beneficiary.

When receiving money from abroad, you may be charged an additional commission which may either be a percentage of the amount subject to a minimum or a maximum or a flat fee depending on the amount you receive and depending on the fee structure of your bank. Some banks may not charge for any incoming payments if the SEPA payment is below a certain amount. However, incoming payments in other currencies may attract a charge.

Keep in mind that if funds are credited in an account of a different currency, the bank will apply an exchange rate to convert the amount.
For a payment to be regulated by the Payments Services Directive, the payment must be:

(i) in euro or in another currency of an EU Member State or the national currency/currencies of Liechtenstein, Norway and Iceland (that is European Economic Area (EEA) currencies);

(ii) from or to an account held with a bank in the EEA.

All banks in the EU (including Malta, of course) are obliged to process transfers in euro and EEA currencies at the latest by the end of the next business day at no additional costs to the remitter or beneficiary of the funds. This also applies if you are sending/receiving payments from or to an account held with a bank in the EEA. If your request is made through a bank branch (rather than electronically through internet banking, where available), the bank may delay the process by a further one day.

Hence, banks of beneficiaries of funds shall value date and make available the amount of the payment transaction to the payee’s payment account at least by the following day after they received the funds in good order (i.e. processed using correct IBAN and on SHARE basis).

As from 1 February 2014, all credit transfer or direct debit payments in euro made within or between any of the 27 EU Member States, Iceland, Liechtenstein, Norway, Switzerland and Monaco must be SEPA compliant. This means that:

Consumers will be able to reach all accounts SEPA-wide from one home country account. More widely accepted payments cards will displace cash improving customer safety and security.

For smaller businesses (SME) faster settlement and simplified processing will improve cash flow and reduce costs. It will enable them to receive or make euro-payments anywhere within SEPA on the same basis.

For large merchants and corporates, common standards enable the construction of one standard platform for payments in the whole SEPA resulting in major savings. For example, one single file in a common format could be used to receive and send payments throughout SEPA.

For governments and public administrations, common schemes and standards will enable the delivery of improved services to citizens at home and abroad. It will also facilitate the delivery of transaction-related e-Government

The Payments Services Directive – the legislative framework of the European Union in regard to payments – is implemented in Malta within rules (called Directives) issued by the Central Bank of Malta. Directive No 1 on The Provision and Use of Payment Services is available from this link:

Last updated: Sep 07, 2016

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