SEPA (Single Euro Payment Area) and SWIFT (Society for Worldwide Interbank Financial Telecommunications) are the most known payment systems. SEPA is a purely European system designed to create a single payment system for European countries. SWIFT is an international system that is available all over the world, including through cooperation with correspondent banks. Currently SWIFT system includes about 210 countries and 11 000 financial corporations, SEPA system is used by more than 20 million companies and 500 million consumers throughout Europe.
Although SWIFT system allows you to make payments quickly and worldwide, SEPA has advantages for the companies operating in the European Union.
- Payment transactions in SEPA are secure and unforeseen situations are easier and faster to dispute here than in the international system.
- SEPA allows non-banking companies, for example, companies operating under e-money licenses or payment institutions, directly, without intermediary banks, to connect to the system, having equal conditions with all financial market participants, as well as to receive their own IBAN BIC codes.
- Payments in SEPA system are cheaper: direct payments, SEPA credit transfers, SEPA direct debit payments for the EU members are cheaper than using SWIFT.
- SEPA allows you to create and open an individual client IBAN account using a unique 5-digit code of a specific financial institution.
- Fintech companies can keep their funds, as well as the funds of their clients in the central banks of the EU member states, which significantly reduces the risks and costs of using this service.
- Alternative SWIFT connection TARGET2 allows making payments in euros all over the world. This service is also available to financial institutions in the non-banking sector.