Share This

SEPA political, legal and regulatory framework


The EPC contributes to the achievement of a Single Euro Payments Area (SEPA), a project driven by the European Union (EU) institutions.

As an integration initiative driven by policy-makers, the SEPA project requires a political will and mandate.

The political drivers of SEPA

The development of SEPA is supported by four EU institutions:

  • The European Commission (Commission), which represents the general interest of the EU and is the driving force in proposing EU legislation, administering and implementing EU policies, enforcing EU law (jointly with the Court of Justice) and negotiating in the international arena.
  • The European Central Bank (ECB) and the Eurosystem (made up of the ECB and the national central banks of euro countries). In its role as a catalyst for the integration of the euro payments market and in line with its mandate to promote the smooth operation of payment systems, the ECB has steered the SEPA process since its inception. In 2013, the ECB set up the Euro Retail Payments Board (ERPB), which it chairs. This high-level body brings together the supply and the demand side of retail payments and addresses strategic issues in this area (such as instant payments, Person-to-Person mobile payments, etc.). Its role is to advance payments integration now that most euro credit transfers, direct debits and card payments are harmonised at the European level. The EPC is a member of the ERPB. The ERPB’s statements, following each of its biannual meetings, and its deliverables are available on the ECB website.
  • The European Parliament, which is the elected body of the EU. The Parliament consists of 751 members elected by citizens of the EU Member States. The members work in unison with the Commission and the Council in shaping the laws and policies of the EU.
  • The Council of the EU, which represents EU governments (Council), and in particular the Economic and Financial Affairs Council (ECOFIN), which is composed of the finance ministers of the EU Member States.
The SEPA Regulation defined mandatory deadlines for migration to SEPA

Regulation (EU) No 260/2012 establishing technical and business requirements for credit transfers and direct debits in euro and amending Regulation (EC) No 924/2009, commonly known as ‘the SEPA Regulation’, is instrumental in the SEPA process. Adopted in February 2012, it defined the deadlines for EU countries to use SEPA credit transfer and direct debit schemes when making euro transactions:

  • Initially set for 1 February 2014, the date at which all euro countries had to replace national euro credit transfers and direct debits (except ‘niche products’) by SEPA Credit Transfer (SCT) and SEPA Direct Debit (SDD), was later postponed to 1 August 2014 (as described in ‘Regulation (EU) No 248/2014 amending Regulation (EU) No 260/2012 as regards the migration to Union-wide credit transfers and direct debits’). SEPA migration has therefore largely been complete since 1 August 2014.
  • 1 February 2016 marked the end of all transitional exemptions in EU Member States (such as the derogation for the International Bank Account Number or IBAN and for ‘niche products’).
  • Lastly, non-euro countries had to comply with the SEPA Regulation when making euro credit transfers and direct debits by 31 October 2016.

The SCT and SDD schemes have to comply with the technical requirements detailed in Article 5 of and in the Annex to the SEPA Regulation.

The payment services directive and its revised version: two critical pieces for the advancement of innovative European payments

Directive 2007/64/EC of the European Parliament and of the Council of the EU of 13 November 2007 on payment services in the internal market’, referred to as the Payment Services Directive (PSD), was implemented by most EU Member States by 1 November 2009. The PSD aimed to establish a modern and comprehensive set of rules applicable to all electronic payment services – not just SEPA services – in the EU. The PSD is not a 'SEPA Directive'; instead, the very broad and ambitious scope of the PSD makes it one of the most significant and comprehensive pieces of EU financial services legislation in relation to the payments market. The PSD is of particular relevance with respect to the roll-out of SEPA direct debit services due to the PSD’s introduction of common rules for the authorisation and revocation of direct debits.

The digitalisation of the European economy has steadily progressed since the implementation of PSD, creating new players who offer new services for online payments (the fintech start-ups). These were outside the scope of the PSD and not regulated at EU level. In order to take into account this new state of play, the Commission proposed a revised Payment Services Directive, widely known today as ‘PSD2’. Its objectives are to make payments safer, increase consumer protection and foster innovation while ensuring a level playing field for all, including newcomers. This EPC infographic explains the main aspects of PSD2.

PSD2 was published on 23 December 2015. Its official name is ‘Directive (EU) 2015/2366 of the European Parliament and of the Council of 25 November 2015 on payment services in the internal market, amending Directives 2002/65/EC, 2009/110/EC and 2013/36/EU and Regulation (EU) No 1093/2010, and repealing Directive 2007/64/EC’. The PSD2 should be transposed by EU Member States into national law by 13 January 2018, by which date the PSD will be repealed. The implementation of PSD2 relies on the six Regulatory Technical Standards (RTS) and five sets of Guidelines related to PSD2 that the European Banking Authority has been mandated to develop. One particular RTS on strong customer authentication and common and secure communication is especially instrumental.

Regulation (EC) NO 924/2009 on cross-border payments in the community

Another regulation that contributed to shaping the landscape of European payments is ‘Regulation (EC) 924/2009 of the European Parliament and of the Council of 16 September 2009 on cross-border payments in the community and repealing Regulation (EC) 2560/2001’. It introduced provisions which further promoted EU financial integration in general and SEPA implementation in particular. 

It had a significant impact due to the introduction of the following provisions:

  • The pricing of euro cross-border direct debits are, as of November 2009, aligned with those of local transactions (as was already the case for credit transfers and card transactions).
  • The setting of clear rules for transaction-based multilateral interchange fees until November 2012.
  • Since November 2010, banks in the euro area offering direct debits in euro to debtors are mandated to be reachable for cross-border direct debit collections.

This Regulation became applicable across all EU Member States on 1 November 2009.

In 2012, the provisions regarding direct debit interchange fees set out in Regulation (EC) 924/2009 were amended in accordance with 'Regulation (EU) 260/2012 establishing technical and business requirements for credit transfers and direct debits in euro and amending Regulation (EC) 924/2009'.

In 2019, the Regulation has been further amended by “Regulation (EU) 2019/518 amending Regulation (EC) 924/2009 as regards certain charges on cross-border payments in the Union and currency conversion charges”, which will align the costs of cross-border payments in euros between euro and non-euro countries and increase the transparency of charges related to currency conversion services across the EU.