Companies that regularly invoice foreign partners have probably already heard of SEPA and international payments. But what exactly is the difference between these forms of payment? Allow us to explain.
European payment in euros? SEPA
SEPA stands for ‘Single Euro Payments Area’. In this single payments area you enjoy free euro payment traffic between all participating countries. And these countries don’t necessarily have to be members of the EU or use the euro: Switzerland, Norway and the UK also belong to the SEPA countries. Although the UK’s status is somewhat unclear due to Brexit.
A SEPA payment allows you to transfer money quickly and easily: by card, transfer or direct debit. The SEPA regulation covers all payments in euros in the single euro payments area as internal payments. It means European transactions are handled in the same way as domestic transactions. This is why a SEPA payment is also free of charge: it takes place in the European single payments area in the same currency, i.e. the euro.
Did you know that Isabel 6 processes almost 5 million international payments annually?
The rest ? International payment
Are you making a transfer in another currency than the euro and/or to a country outside the European single payments area? Then it concerns an international payment. An international payment has to be transferred, a European direct debit is not possible.
An international payment – unlike a SEPA payment – may involve costs. These costs may be charged by the payer’s bank or the beneficiary’s bank. Usually, each party bears the costs of its own bank, but the parties can agree on a different arrangement. It is best to reach clear prior agreements on this with the other party. In this way you can maintain a good working relationship.