SEPA stands for Single Euro Payments Area. The idea behind the project is to have a single space within Europe where citizens, companies and other economic actors will be able to make and receive payments in euro, whether within or outside national borders, under the same basic conditions, rights and obligations, regardless of their location. Thus, there is no longer a difference between national and intra-European cross-border payments: all payments in euro will essentially be domestic. Geographically, SEPA is not limited to the euro area, but includes all of the European Economic Area (the 27 EU member states, Iceland, Liechtenstein, Norway) and Switzerland.

The major stakeholders

At the European level, implementation of the SEPA project works on a three-pillar basis. Via the Payment Services Directive (PSD), the European Commission has established the legal framework for the implementation of SEPA. Member states have to transpose the PSD into national legislation by 1 November 2009. The European Central Bank (ECB) is responsible for monitoring the implementation and design of SEPA, and actively promotes the harmonisation of payments in Europe. Finally, the European Payments Council (EPC) defines business rules, standards and policies.

At national level, governments, central banks and banking associations take care of the design and executions, as well as of the implementation of and migration to SEPA.


In Luxembourg, the ABBL acts as National Adherence Support Organisation (NASO). As NASO, the ABBL supports banks in Luxembourg in their migration towards SEPA compliant payment systems. The ABBL has also developed the Luxembourg Interbank SEPA Agreement (LUISA). Members of the Luxembourg banking community have signed this agreement, which formally lays down the commitment of participating banks or institutions to actively support and implement SEPA services. The ABBL also officially represents the Luxembourg banking community at the European Payments Council (EPC).

SEPA Milestones

Date Action
31 March 2012
  • Reachability obligations in Eurozone MS
  • Payment accessibility
  • Amendments to Regulation 924/2009
1 November 2012 No Multilateral Interchange Fees per for cross-border direct debit transactions
1 February 2013 Notification of the competent authorities responsible for the compliance of the Regulation
1 February 2013 Member States shall lay down rules on the penalties applicable to infringements on the Regulation
1 February 2013 Notification of bodies responsible for out-of-court complaint and redress procedures
1 February 2013 Member States to notify the European Commission should they intend to make use of derogations listed in Articles 16.1, 3, 4, 5 and 6.
1 February 2014 End-Date for “legacy” national credit transfers and direct debits. Requirement to apply the technical requirements of the pan-European schemes.
1 February 2014 Provision of the BIC no longer mandatorily required for national payment transactions (Unless individual Member States decide to utilise the extended transition option under Article 16(6))
1 February 2014 Interoperability requirements in Eurozone MS
1 February 2014 End-Date for the issuance of new direct debit mandates based on national formats
1 February 2016 Provision of the BIC no longer mandatorily required for cross-border payment transactions
1 February 2016 End of transition period for offering BBAN/IBAN conversion services by PSPs for national payments. (MS option)
1 February 2016 End of transition period for “legacy” niche products with a cumulative market share of less than 10% of the total national credit transfers and direct debits. (MS option)
1 February 2016 End of transition period for payment transactions generated using a payment card at the POS (e.g. the German “Elektronisches Lastschriftverfahren” (ELV)) (MS option)
1 February 2016 End of transition period for the exception to the mandatory use of ISO 20022 XML standard for bundled together payments (MS option)
1 February 2016 End of transition period under which MS can defer the requirement for “IBAN only” for national payment transactions (MS option)
1 February 2016 Removal of (national) settlement-based reporting obligations for PSPs by 1st February 2016 at the latest.
31 October 2016 Reachability obligations for PSPs in non-Eurozone MS offering payment services denominated in euro. If euro becomes a national currency before 31 October 2015, PSPs to be reachable within one year.
31 October 2016 End-date for migration to pan-European payments schemes for euro payments for non-Eurozone MS. If euro becomes a national currency before 31 October 2015, compliance one year after joining the euro.
31 October 2016 Interoperability requirements for PSPs in non-Eurozone MS. If euro becomes a national currency before 31 October 2015, compliance one year after joining the euro.
1 February 2017 No multilateral interchange fees per national direct debit transaction
1 February 2017 Review: Report to be issued by the European Commission to the European Parliament and Council on the application of the Regulation, if appropriate with proposal

SEPA Payment Instruments

Besides Cash, SEPA covers three main types of payment instruments:

  •     SEPA Credit Transfers
  •     SEPA Direct Debits
  •     SEPA Cards

SEPA payments have replaced the existing national payment instruments after a transition period during which new SEPA services will co-exist with current instruments.

The SEPA Credit Transfer scheme defines the common norms that apply for credit transfers. It thus defines the message format used between banks (SWIFT messages using XML), standard codes identifying beneficiary and bank (IBAN and BIC) and all the information that a given message must contain. As a matter of fact, Luxembourg customers have been using IBAN and BIC codes ever since 2002. On 28 January 2008, SEPA Credit Transfer was the first SEPA compliant service to be launched.

The SEPA Direct Debit scheme defines the use of the same message formats and encoding standards as those used for credit transfers. Importantly, the debtor now directly mandates the creditor to debit their account, rather than having to give this mandate to their (the debtor’s) bank, as was the case in Luxembourg until now.

As far as SEPA Cards are concerned, they  function similarly to the debit cards that already exist at national level, except that they can be used for payment in the whole of the SEPA space at the same conditions as in the cardholder’s home country.


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