How to Send a SEPA Payment from the UK

March 20, 2023

 How to Send a SEPA Payment from the UK

If you’re wondering whether you can use SEPA to send or receive payments between the UK and the EU, the answer is yes. Businesses that wish to make SEPA payments between these two regions can do so. You might face new regulations related to SEPA because of Brexit, but the opportunity is still there. Keep reading to learn more.

What Are SEPA Payments?

SEPA payments refer to a payment scheme available in the European Union, Iceland, Norway, Liechtenstein, and Switzerland. Single Euro Payments Area transfers allow businesses to send funds securely and quickly. 

The SEPA payment scheme consists of three types: SEPA Instant Credit Transfer, SCT Inst for short, SEPA Credit Transfer known as SCT, and SEPA Direct Debit Transfer called SDD. 

Participants of the scheme – that’s you and your company – can transfer funds from one bank account to another in SEPA-member countries using a standardised method that allows for fast cross-border payments at a lower cost than with traditional methods. The convenience remains the same as when transferring in the domestic region. 

A SEPA payment is a direct transfer between the bank accounts of the sender and recipient. It requires only the IBAN (International Bank Account Number) and BIC (Business Identifier Code) of both parties. Currently, SEPA payments are available in 36 countries.

Is the UK a Member of SEPA Even After Brexit?

The short answer is yes; it is still a part of the scheme. Businesses in the UK can continue to use the SEPA payment method when sending money to EU members and Switzerland. 

Although the underlying idea stays the same, some additional details are necessary when making these payments. In certain countries, banks may impose extra fees on SEPA payments from the UK. Nevertheless, this is not a common case, and the majority of transactions between the UK and the Eurozone do not result in extra charges.

SEPA Payment Instructions for the UK and the EU

SEPA remains a nice, practical option for businesses in the UK and the EU to transfer funds via direct debit or direct credit. However, the changes caused by Brexit require payment instructions from the merchant’s bank to include the postal address of the debtor bank. For SEPA Credit and SEPA Instant Credit Transfers, it is an obligation to specify the full address of the sender and the BIC code of the recipient bank. 

In case of gathering funds from the creditor by Direct Debit (SDD Core and B2B), be sure to specify the full address of the debtor and the BIC code of the debtor bank. As per the European Payments Council (EPC), the absence of these additional transaction details may result in transactions being declined. Therefore, it’s highly advisable to make sure that you have all the essential information available when you send or receive payments between the UK and the EU.

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What Has Changed with Cross-Border Transactions After Brexit?

Following the onset of Brexit, financial enterprises prepared for the possible position of the European Banking Authority, anticipating potential changes. As a result, UK-based financial institutions were unable to use their licences and regulatory approvals to carry out cross-border business with the European Economic Area, which, in fact, put an end to such operations.

Treasury and payment system specialists had to adapt to the new rules and changed European payment forms while simultaneously handling liquidity, ensuring business continuity, and modifying working capital. Let’s look at how things are today.

Additional Third-Party Bank Fees

As mentioned above, some European banks are now adding extra charges for SEPA payments between the UK and EU because they see them as cross-border, which is causing concerns. Opinions on this matter vary significantly, so the words you’ll hear from one business owner may completely contradict what others are saying. To address the increased costs, many complaints have been made to major industry bodies and communities representing the national banking system. 

However, Payrow users do not have such problems. For example, when using Payrow to make payments through FPS and SEPA, you won’t have to worry about extra fees or intermediary banks. There are no issues with commissions between the UK and the EU. As noted by the company, Payrow uses a commission type called SHA, which means that both the sender and the recipient of the payment are responsible for their own expenses.

New Data Requirements

To transfer money between the UK and the EU, you now need to specify additional information following the Funds Transfer Regulation of the European Union. While the names of the payer and payee and account numbers have always been compulsory, the new regulations require their addresses, official numbers of personal documents, customer ID numbers or dates, and places of birth. If the required data is not provided, the payment service provider known as PSP may reject the payment. This makes cross-border payments more difficult and burdensome to handle.

While it may seem like a hassle for customers to provide extra information, and the new rules are not preferable, modern financial services have been put in place to make things simpler and easier. Financial services are designed to streamline customer interactions and reduce the time it takes to gather the necessary information and complete registration procedures. Nevertheless, keep in mind that the processes for collecting and filling in information are necessary to prevent payment mistakes and minimise the number of refunded payments. According to Payrow, these processes still need to adapt and evolve to reach the desired balance between security and speed. And Payrow can achieve this using modern technologies and a professional team that can quickly resolve any client issues.

IBAN Discrimination

International Bank Account Numbers are used to determine bank accounts worldwide. The first two characters of the code refer to the country, indicating the location of the account. Despite the continued participation of the UK in the SEPA market of the European Union, there were reports that European companies refused SEPA payments and direct debits of funds from GB IBAN numbers. 

The cases when this happens are called IBAN discrimination. This violates EPC SEPA regulations (EU No. 260/2012), which leads to significant fines for those who are responsible. The problem is a serious risk and may cause extra complications for cross-border payments after Brexit. 

Payrow Services and SEPA Payments

At Payrow, we do not allow for any kind of discrimination, as we are committed to providing our customers with seamless and universal payment solutions. We have partnered with iban.com to ensure that our users’ details are validated and processed without any issues. In the unlikely event that you encounter any difficulty when using Payrow for your payments, our dedicated customer support team will be there to help you promptly. 

With Payrow, you receive a reliable and efficient service, which is a prerequisite when managing finances. You can take advantage of using SEPA payments and enjoy cutting-edge technological solutions without any charges to expand your business and reach new customers worldwide. Make domestic payments in the UK as well as in the Eurozone and beyond with just a few clicks — use Payrow

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