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Mo Money Mo Rights

Explainer: What is this SEPA thing all about?

Have you your IBAN ready?

A MAJOR CHANGE in how electronic transfers of credit take place across Europe is due to come into force on later this year, known as SEPA.

A date of 1 February was originally set for this, but has been pushed back until August as many companies are not ready to migrate. It will still be in operation, but compliance is not required until later this year.

You are likely to have heard or seen advertisements asking you if your business is ready for it, but not a huge amount about what consumers can expect. There are a few things they have to bare in mind, but nothing too complicated.

If you’re a little unclear about what SEPA, fear not, can explain.


Basically, what is it?

Payment systems across the 28 EU Member States, along with Iceland, Lichtenstein, Monaco, Norway and Switzerland, will now be harmonised – hence the name, the Single Euro Payments Area.

This means that if you want to move money from, for example, a Republic of Ireland bank account to a French bank account, it will now be as easy as if both accounts were in the same country.

Previously, different processes applied.

I know what you’re thinking. “I can now easily pay the electricity bill for my holiday villa in Spain .”

Well aren’t you lucky? But yes. You can now setup a direct debit from your own ROI bank account, without having to setup a seperate one in Spain.

First thing’s first – you will need your IBAN.

Previously you would have been required to provide your six digit National Sort Code (NSC, something that looked like 92-12-34) and eight digit Basic Bank Account Number (BBAN) in order to receive payments.

More recently, you might have been asked to provide your International Banking Account Number (IBAN). This is what you will be asked for from now on – it will look something like IE64IRCE92050112345678.

This is a combination of your Sort Code and Account Number, with an extra two letters and two numbers, followed by another four letters, at the start. You will find it on recent bank statements, or alternatively the Irish Payment Services Organisation (IPSO) offer a secure online IBAN generator.

This is only for electronic payments. Your NSC and BBAN will still appear on any paper transactions, such as a cheque book.

You will need your IBAN if you’re signing up for a new direct debit. Everything else will be switched over automatically. Sit back and relax, alright?

B2B or not B2B, or B2C. What?

This means “Business to Business” or “Business to Consumer” Transfers, the first simply deals with direct debits between two businesses, but the second is what a consumer should be interested to hear more about.

Under this new form of “core transaction”, you are entitled to a complete refund of a direct debit for eight weeks after the payment is taken.

Of course you will still owe money to your phone company or electricity company or whoever it might have been, but it will be back in your own account.

Don’t own a business? That’s you off the hook.

You shouldn’t notice a change until the next time you enter a situation where you would usually be asked to provide your NSC or BBAN. Everything else should be handled by the banks and business who take direct debit payments or provide you with credit transfers, such as payroll.

What you will be able to do is setup direct debits from your account from companies in other countries.

Oh, you do own a business? Well then…

Businesses must ensure their employee payroll and any direct debits they might be subject to are switched over to SEPA, and that their accounting systems have been updated. This is more important for large companies, and who have been contacted by the Central Bank already to give them a heads-up that it might be tricky.

If they don’t switch over their systems, they simply won’t be able to make electronic transfers. Banks will no longer accept non-SEPA payments from within the 32 states using the system. They will also be breaching EU regulations.

And how will this change the day-to-day running of a business?

Any difficulties you’ve encounter when attempting to move money from one of the 33 states involved to another will no longer apply. It will be as if both parties are operating within Ireland.

Same as consumers, businesses can avail of some financial services offered by banks in other countries without having to open an account there.

This means that for companies who operate in more than one country, the can consolidate their banks. This means less fuss and less cost.

That wasn’t enough?

If you are looking to read about SEPA in more detail, have a look here:

Read: Check behind the couch, there’s still €231.3m worth of Punt hanging around >

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