How to Buy Cryptocurrency with SEPA?

What Is SEPA?

The unification of European countries into a common space requires the introduction of a single standard system of payments, independent of borders and limitations of local financial regulation. Such a system, called Single Euro Payments Area (SEPA), has been created consistently over several years and today it is already fully operational in almost all European countries.

Now, users can buy cryptocurrency with SEPA and quickly and inexpensively make payments from their bank accounts, using only a minimum of information about the recipient of the money. 

How and Where to Pay?

First of all, it is worth delineating the geographical boundaries in which a single payment system operates. At the moment, according to the official website of the European Union, SEPA operates in 36 countries. The SEPA zone does not include most of the overseas territories of European countries, as well as the Faroe Islands and Greenland, which belong to Denmark. 

From the point of view of banks, there is a certain difference in how SEPA operates in the countries of the European Economic Area and the rest of the member states of the system, namely Switzerland and Monaco. In the EU and EEA, banks must fully comply not only with the rules of the system itself, but also with pan-European laws related to payments, while Swiss and Monegasque banks use SEPA on a commercial basis, not subject to EU laws. For clients, in the vast majority of cases, this does not matter much: issues can arise only in the case of  serious problems that require contacting government agencies.

The currency for transactions within SEPA is only the euro, in whatever country the sender and recipient of the payment are located. But banks from countries outside the euro area offer a transparent way to pay in national currencies: the client sends money, for example, in Czech crowns, and the bank transfers the amount in euros and sends the recipient's bank exactly the euro.

It is worth noting that the conversion is not part of the SEPA payment and is made at the bank's rate, which can often be unprofitable. If such operations are carried out rarely and for small amounts, then this can be put up with. If losses become noticeable, customers can open accounts in euros and decide on their own where and how much to take European currency and how to convert it into local money upon receipt.

What Are SEPA Payments Types? 

There are three types of payments in the SEPA system: credit, debit and card. A loan payment is a regular payment initiated by the payer (the word "credit" in this case is not related to borrowed funds). Simply put, if a bank client wants to transfer money for goods or just to someone's account from his account, he makes a "credit" payment. The direct debit operation is performed by the payee. For example, if the owner of an apartment has allowed the gas company to automatically debit their monthly gas payment from their bank account, then the company can do this using SEPA, withdrawing money from the account without additional actions on the part of the client. 

Card payments in this context are more related to banks.The key feature of SEPA for banking clients is the simplicity and standardity of the operation for any country included in the system. For example, if a Parisian has a country house somewhere in Sitges on the Spanish coast and has to pay regular electricity and water bills, he doesn't need to open a bank account in Spain or deal with international payments. 

It is enough to allow the service company to withdraw money from your account in a French bank or make regular payments yourself through a simple and understandable form in a familiar Internet bank. From the point of view of both an individual and a company, there is no difference between a local payment and an international one under the SEPA system.

The main requirement when making a SEPA payment is to indicate the IBAN code as the beneficiary's account number. 

In addition to numbers, the payment also indicates the name or company name of the recipient and the name of his bank, although technically this information is not necessary.

According to SEPA rules, the payment should go no more than one business day, that is, if the payment was received by the bank before 18.00, the money should be credited to the recipient's account on the next business day at the latest. 

In reality, some banks sometimes carry out transactions even faster: when paying before a certain hour, the money comes to the recipient on the same day. The distance and number of state borders between the sender's bank and the recipient's bank do not matter, everything happens automatically within the same payment network.

How Much Does It Cost?

SEPA was originally conceived as the cheapest possible payment system. And so it happened: in many banks, payments under a single system are free for users – either completely or starting from a certain amount. 

If a bank charges a commission for a payment, then it is 3-5 euros per transaction. However, it is worth remembering that if the sender makes a mistake when filling out the payment document, then the search and return of the payment can cost some money – up to several tens of euros. It is even simpler for recipients: SEPA rules stipulate that the recipient of the payment receives the entire amount in full, without any commissions from the bank. In fact, of course, transfers are not free, but these amounts are simply “dissolved” in bank rates, which include monthly or annual service fees, or are offset by other income received by banks from operations with customer funds.

How to Buy Bitcoin with SEPA? 

Is it possible to buy cryptocurrency with SEPA? Yes, you can easily buy Bitcoin with SEPA. In November 2017, instant bank transfers became available to customers of SEPA. This news turned out to be very positive for European BTC exchanges.

This model has been implemented by the European Retail Payments Board (ERPB). Within the traditional banking system, transferring money from Bank A to Bank B can sometimes take two or three business days, opening up new opportunities for companies.

Under this model, bank transfers are carried out almost instantly, including on weekends, regardless of whether the bank is open on that day or not. The scheme also applies to transfers of individuals, which makes it revolutionary.

It also has a positive effect on Bitcoin exchanges that work with European clients. Now, they can buy cryptocurrency with SEPA. The exchange of cryptocurrency for euros is much faster, and this, in turn, has a positive effect on the wider adoption of BTC by both companies and buyers. Also, a resident of the EU can buy Bitcoin Cash with SEPA transfer in any European country

Although it is a great initiative, allowing people to buy Bitcoin with SEPA, there is one caveat: the implementation of instant transfers is not mandatory for all banks, and each financial institution decides separately whether to adopt it or not.

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Author
Maxim Katrich
18.08.2022
Crypto enthusiast, editor of BitOnfeed, expert on the NFT industry.
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