1

Table of Contents
Introduction 3
SEPA 101 4
What is SEPA? 4
SEPA Members 4
How SEPA Works 6
History of SEPA 7
SEPA Origins 7
SEPA Key Dates 7
Organisations Involved in SEPA 8
Types of SEPA Payments 16
Common Characteristics 16
Overview of SEPA Payment Schemes 19
SEPA Credit Transfer 19
SEPA Instant Credit Transfer 20
SEPA Direct Debit Core 20
SEPA Direct Debit B2B 22
SEPA Request-to-Pay 23
SEPA Payments in Numbers 24
SEPA Indirect and Direct Participant Flows 28
Returns 28
Recalls 28
Inquiries 29
Reason Codes 29
SEPA and ISO 20022 Messages 30
ISO 20022 Messages 30
Understanding ISO 20022 XML Messages Used in SEPA 32
Payments 33
Payment Status Reports 34
Account Reports 36
Other Payment Networks and Schemes 42
SWIFT Payments 42
UK Local Schemes 43
Numeral for SEPA Payments 43
Appendixes 45
Glossary 45
IBAN Format per Country 46
IBAN Verification Algorithm 48
Bank Transaction Codes 49
Further Readings 51
Authors 51

SEPA Guide 2
Introduction
Since 2008, the Single Euro Payments Area (SEPA) has made euro-denominated
bank payments simpler and faster. In 2021, SEPA payments accounted for more than
95% of all bank-based payments in the European Union and enabled the transfer of
value between individuals, companies, governments, and non-governmental
organisations across the 36 countries of the SEPA zone.

SEPA payments facilitate diverse use cases from paying salaries, insurance claims,
and large purchases to collecting taxes, loan repayments, and rents to funding
wallets and investment accounts. With 43 billion payments per year, SEPA payments
are the pulse of the European economy.

The SEPA initiative is actively pushing innovation through new schemes such as
Instant Credit Transfer and Request-to-Pay – standards that continue to accelerate
payments and facilitate online and offline commerce. But, understandably, SEPA is
becoming increasingly challenging to comprehend.

This guide is brought to you by the team behind Numeral, the API-first payment
operations software helping companies accelerate their SEPA payments with their
banking partners.

We aim to provide readers with a thorough overview of how SEPA works, while
highlighting recent additions and improvements so that readers more familiar with
the initiative can refresh their knowledge. We also outline challenges companies
processing SEPA payments face around connectivity, file formats, and automation.

By reading this guide, you will learn everything you have always wanted to know
about SEPA and how the initiative continues to evolve to improve payments for
consumers and businesses across Europe.

SEPA Guide 3
SEPA 101
What is SEPA?
SEPA is a single payment area that uses the euro as its single currency. The four
SEPA payment schemes are used to send and receive different types of euro
payments from one bank account to another, with the SEPA technical and
operational standards enforcing speed, cost, and security guarantees.

SEPA was introduced for credit transfers in 2008, direct debits in 2009, and instant
credit transfers in 2017. Credit transfers (regular and instant) are used to send a
payment from account A to account B. Direct debit is used to debit money from a
third-party account B and credit it to account A, based on the authorisation granted
through a direct debit mandate signed between the debtor and the creditor.

The development of SEPA is part of the mandate of the Eurosystem, a group

composed of the European Central Bank (ECB) and national central banks of other
eurozone member states. National central banks make the necessary market
infrastructure available to the banks in their respective countries.

SEPA Members
As of September 2022, the SEPA zone spans 36 European countries, including:

✓ The 27 countries members of the European Union (EU)

✓ 4 members of the European Free Trade Association (EFTA) (Liechtenstein,

Norway, Iceland, and Switzerland)

✓ 4 microstates with special arrangements with the EU (Andorra, Monaco,

Vatican City, and San Marino)

✓ The United Kingdom after they left the EU in 2020

4
Of the 36 countries in the SEPA zone, 14 do not use the euro as their official
currency. Only the payments sent and received in euro in these countries can be
made as SEPA payments. Payments sent and received in local currencies to and
from these countries use other local or international payment schemes and are not
SEPA payments.

SEPA Guide 5
How SEPA Works
SEPA payments involve and require the active involvement of account holders,
payment service providers (PSPs), clearing and settlement mechanisms (CSMs), and
the European Central Bank (ECB).

A SEPA payment is a euro movement from one account held by a PSP in the SEPA
zone to another PSP in the SEPA zone. The payment can be initiated and pushed
from the debtor account (credit) or initiated and pulled from another account (debit).

PSPs are responsible for sending and receiving payments as well as holding the
debtor’s and the creditor’s accounts, that is to say, increasing and decreasing their
respective balances. Historically, banks were the only PSPs participating in the
SEPA. However, the evolution of European regulations through directives such as
EMD2 (2009), PSD1 (2007) and PSD2 (2016) directives enabled a new generation of
PSPs to emerge.

CSMs are responsible for clearing and settling the payments between PSPs, with
settlement occurring through PSP’s accounts held by the ECB.

SEPA Guide 6
History of SEPA
SEPA Origins
The origins of SEPA are tightly linked to the formation and strengthening of the
European Community and the European Union. SEPA aims at simplifying,
harmonising, and accelerating payments across SEPA members, by using the euro as
a single currency and by leveraging standardised payment schemes.

SEPA Key Dates

Year Event

1957 The Treaty of Rome creates the European Community.

The twelve founding members of the European Community form the European
1992 Union. Among other things, the Treaty of Maastricht creates the euro as a single
currency and the eurozone.

2002 First euro coins and banknotes go into circulation.

2008 The SEPA Credit Transfer (SCT) scheme is introduced.

2009 The SEPA Direct Debit (SDD) Core and B2B schemes are introduced.

SEPA credit transfers and direct debits become the dominant form of payments in
2014
the euro area, respectively 94% and 80% of all payments as of February 2014.

2017 The SEPA Instant Credit Transfer scheme is introduced.

2020 The SEPA Request-to-Pay scheme is introduced.

SEPA payments account for 94% of all credit transfers and 98% of direct debits in
2021
the eurozone.

SEPA Guide 7
Organisations Involved in SEPA
Various organisations are involved in standardising and operating SEPA payments.

European Commission
The European Commission, with inputs from the ECB and the European Payments
Council (EPC), is responsible for drafting the regulations and directives that form the
legal and technical framework for SEPA.

European Payments Council

Founded in 2002 as a not-for-profit association and now counting 77 members, the
EPC is responsible for harmonising payments across Europe. The EPC specifies the
payment schemes used by PSPs and operated by clearing and settlement
mechanisms (CSMs). The EPC is not a regulator and does not have a mandate from
the EU or any other political, legislative, or regulatory institution, but rather
represents and defends PSPs in front of European institutions, such as the ECB.

The role of the EPC is to provide the technical framework for each SEPA payment
scheme. One of the key publications of the EPC is the SEPA rulebook. SEPA
rulebooks define the business rules and technical standards which oversee each
SEPA payment scheme. New rulebooks are published every year in November and
come into effect in November of the following year. When a new rulebook comes into
effect, SEPA participants as well as CSMs are expected to update their systems and
processes by implementing new validation rules and adjusting existing ones as well
as supporting new SEPA message formats.

SEPA Guide 8
Four-corner Model
SEPA payments rely on a four-corner model, based on one originator and its PSP (in
most cases a bank) and one beneficiary and its PSP. PSPs are not connected to
each other, but are interconnected through a CSM for the clearing and settlement of
their payments.

A simplified version of how a SEPA credit transfer is processed is as follows. The

originator places a credit transfer order to their PSP. The originator PSP makes the
necessary checks to ensure that the order is complete and that the order can be
executed successfully. After the execution, the payment is sent to a Clearing and
Settlement System (CSM) which, after successful completion of its own checks and
processing, forwards it to the beneficiary PSP. The beneficiary PSP informs its
customer, the beneficiary, that their account has been credited.

SEPA Guide 9
Account Holders
An account holder can be an individual, a governmental or non-governmental
organisation, a company, or any other entity that holds an account with a PSP.

Account holders send or receive payments as part of their everyday lives or

business operations using a variety of channels including mobile or web banking
applications, cash or treasury management software systems, or bank branches.

Account holders can be both debtors and creditors depending on the payment.

Payment Service Providers

A PSP can be a credit institution (often referred to as a bank), a payment institution,
or an electronic money institution. Regardless of their exact regulatory status and
name, which can vary across countries, a key role and responsibility of PSPs is to
send and receive payments on behalf of their customers by holding customer

SEPA Guide 10
accounts and by connecting to the CSMs. More than 3,900 PSPs participate in at
least one SEPA scheme, with some participating in multiple SEPA schemes.

Starting from 2009, the European Commission passed new directives to foster
competition across the EU and the European Economic Area by allowing non-bank
PSPs to send and receive payments as well as hold accounts. Such directives,
named electronic money and payment services directives (respectively EMD and
PSD1 / PSD2), created nine new regulatory statuses, including electronic money
institution (EMI) and payment institution (PI). Among other services, EMIs and PIs
can send and receive SEPA payments on behalf of their customers.

Unlike SEPA direct participants, SEPA indirect participants do not connect directly to
the CSMs. Instead, a SEPA indirect participant partners with another PSP that is a
SEPA direct participant. The responsibilities of a SEPA indirect participant are more
limited than SEPA direct participants, as they need to support fewer payment flows
and related processes. Most PSPs are SEPA indirect participants. Indirectly
connecting to a CSM as an indirect participant is faster and cheaper than connecting
directly as a direct participant.

Clearing and Settlement Mechanisms

CSM Role
CSMs are an invisible yet essential piece to the SEPA puzzle. To understand how
CSMs work and the role that CSMs play in payments, let’s take the example of Jane
Doe and TravelCo. To pay for her trip to Greece, Jane Doe wants to transfer money
from her account held by PSP A to the account of TravelCo held by PSP B. When
Jane instructs a payment and if Jane holds sufficient funds the money is moved to
the account of TravelCo.

Under the surface, Jane Doe’s bank, Alpha, sends a message to ClearingCo, a local
CSM, asking to move the money to TravelCo’s bank Beta. ClearingCo aggregates all
the payment instructions from and to banks Alpha and Beta during a given period. At
the end of the period, ClearingCo calculates the net amount of all the payment
instructions from and to banks Alpha and Beta. The net amount is transferred
between banks Alpha and Beta. Jane Doe’s account at bank Alpha is debited and
TravelCo’s account at bank Beta is credited.

SEPA Guide 11
CSMs Across SEPA
There are two distinct types of CSMs: retail systems (payments from individuals and
companies) and large-value payment systems or LVPS (payments by financial
institutions).

There are 25 reported retail payment systems within the euro area in 2021. Around
50 billion payments were processed through retail payment systems in 2021, with a
combined value of €41.1 trillion. There continues to be a high degree of
concentration in euro area retail payment systems. However, each member state can
have local CSMs used to execute payments across banks within the same country.

As an example, the French CSM CORE is owned and operated by STET, a group of 6
major French banks, and is used for payments between banks in France. The three
largest systems in terms of number of payments (STEP2-T and CORE in France and

SEPA Guide 12
RPS in Germany) processed 69% of the volume and 72% of the value of all payments
processed by euro area retail payment systems.

Banks rely solely on pan-European CSMs (PE-ACH) to execute payments with other
banks from the SEPA zone. As of September 2022, there is one single pan-European
CSM used by 99% of the SEPA banks, STEP2. Operated by the Euro Banking
Association Clearing (EBA Clearing), STEP2 accounts for 50% of all payments in
value.

After netting payments sent by member banks during the day, STEP2 settles the
payments with accounts held at the ECB through a large-value payment system
(LVPS), which can be either the Eurosystem’s Real-Time Gross-Settlement system
(RTGS) TARGET2 or the EBA Clearing’s equivalent EURO1.

LVPS payments are ECB money movements between bank ledgers. The ECB debits
one bank account and credits another one with the netted amount. In 2021, the
TARGET2 and EURO1 systems settled 140 million payments with a total value of
€510 trillion.

Impact of Instant Payment on CSMs

Since 2017, the introduction of instant payments has challenged the established
payment infrastructures. Instant payments offer final and irrevocable settlement of
payments in euro, at any time of day and on any day of the year — a significant
change from once-a-day settlement.

Clearing and settling SEPA instant payments therefore requires a modern technical
infrastructure developed specifically for the purpose of settling instant payments. It
needs to be designed to:

✓ Secure an end-to-end processing time of 10 seconds or less, as required by

the SEPA Instant Credit Transfer scheme. As a comparison, existing RTGS
systems like TARGET2 process 99.9% of their transactions under 1 minute

✓ Support the expected large volumes of payments and meet scalability

requirements

SEPA Guide 13
 ✓ Secure availability around the clock without maintenance windows, contrary
to RTGS systems which have been historically closed over week-ends and
certain public holidays

✓ Enable a deployment process with no interruption of service

This has led to the introduction of two payment systems dedicated to instant
payments. Launched in 2017, Real-Time 1 (RT1) is a modern, 24 / 7 instant payment
CSM used by 80 members against an annual fee to process SEPA instant credit
transfers. In 2018, the Eurosystem launched the TARGET Instant Payment Settlement
(or TIPS) payment infrastructure to process instant payments. Instant payments are
settled in ECB money. The biggest differentiator of TIPS versus RT1 is that it can be
used by both direct and indirect SEPA participants. As a result, TIPS provides a more
open system to PSPs and other financial institutions.

Software Providers
A variety of software providers are used by individuals and companies to send and
receive SEPA payments with their banks.

Bank Mobile and Web Applications

Bank mobile and web applications are developed and distributed by banks to their
consumer and corporate customers. Although applications might differ depending
on the customer type, they usually enable customers to check their accounts and
initiate payments.

Due to limited automation capabilities, banking apps are most suited for occasional
usage involving a limited number of bank accounts and payments.

Bank Direct Connectivity Solutions

Bank direct connectivity solutions, also called host-to-host solutions, take the form
of file servers (SFTP, EBICS, SWIFTNet…) or APIs to which corporate customers can
connect to automate the sending of payment instructions and the receiving of
various reports, such as payment status reports and account reports, through files
or API requests and responses.

SEPA Guide 14
Although very stable and scalable, they can be complex, time-consuming, and
expensive to deploy. Direct connectivity also requires a high degree of technical
capabilities to integrate with other systems. Last but not least, bank direct
connectivity solutions usually have limited workflow capabilities.

ERP, TMS, and Cash Management Applications

ERP (for Enterprise Resource Planning), TMS (for Treasury Management System),
and cash management applications are used by medium to large-size companies to
run the operations of specific departments such as finance, accounting, and
treasury.

ERP, TMS, and cash management applications can be integrated with bank direct
connectivity solutions to enable straight-through processing of payments and
reports and a single, aggregated view of all accounts.

Enterprise-scale applications can be complex to deploy, integrate, and customise.

They usually require significant staff training as well as the active involvement of
external consultants, which can result in costly implementation projects.

Numeral
Numeral is a payment operations software abstracting the complexity of bank direct
integrations and manual file management. By exposing a single API across banks
and payment methods, Numeral helps businesses to accelerate their payments and
reconciliations with real-time connectivity to banks, robust automations, and built-in
controls. Numeral can be deployed in weeks in an organisation thanks to
developer-friendly API and a central dashboard for finance and operations teams.

SEPA Guide 15
Types of SEPA Payments
Common Characteristics
While the four SEPA payment schemes each have a different purpose, they share
five common characteristics.

Euro as the Sole Currency

All SEPA payments are made in euro. The euro was introduced in 2002 as a single
currency and is currently the official currency of 19 countries and more than 350
million citizens. It is the second most used currency in the world, after the US dollar
and before the Chinese yuan.

IBANs as Account Identifiers

IBANs (for international bank account number) are used to normalise account
numbers across more than 80 countries, including the 36 countries that form the
SEPA zone. However, several major countries including the US, Canada, Australia,
China, and Japan are yet to adopt IBANs.

SEPA payments use IBANs as the sole way to identify debtor and creditor accounts.
IBANs are meant to facilitate account identification, payments, and international
trade by using a common syntax and format. The IBAN format is defined by the ISO
13616 standard. IBANs always start with a two-letter country code, followed by two
check digits, and end with the BBAN (basic bank account number).

Both SEPA direct and indirect participants can issue their own IBANs and open and
hold accounts in the name of their customers. PSPs often see issuing their own
IBANs as a way to further strengthen their brand as well as customer relationship.

SEPA Guide 16
The length of an IBAN depends on the country. Some countries can be chatty (such
as France, with 27 characters), while others can be more straight to the point (such
as Belgium, with 16 characters). IBAN formats per country can be found in the
appendixes of this guide.

Although the syntax of an IBAN can be verified using a basic algorithm, there is no
built-in mechanism in SEPA to verify that the account exists and can be used for a
given payment. A SEPA payment to a valid IBAN can result in a rejection or return, for
instance, if the account has been closed, does not exist, or is not compatible with
the payment method used.

BICs as Bank Identifiers

Bank identifier codes (or BICs) are used to identify PSPs across the SEPA zone. BICs
are registered and managed by SWIFT, a global financial messaging network.

The BIC code structure is specified by the ISO 9362 standard. BICs take the form of
eight (also called BIC8) or eleven (also called BIC11) characters. A BIC8 identifies a
PSP in a given country or city, while a BIC11 identifies a PSP’s exact branch. The BIC
usually includes the PSP shortened name in the bank code.

The IBAN already contains the BIC’s information and it is unnecessary to provide the
BIC separately to send or receive a SEPA payment.

SEPA Guide 17
Full Amount
No fees can be deducted from SEPA payments. The amount sent is always equal to
the amount received. If a fee is to be applied to the payment it results in a separate
fee on the creditor’s account, the debtor’s account, or both.

Cut-off Times
Just as any other business, banks also close their doors at certain times, whether it
is during evenings and nights, weekends, or some holidays (hence the term “bank
holiday”). Banks, CSMs, and central banks publicly list their opening and closing
hours so that their counterparties can adapt. The moment a bank or financial
institution stops processing new payments for the day is referred to as the “cut-off
time”. Banks use closing hours to close books and perform technical maintenance
operations.

Cut-off times are usually expressed in a given timezone. For instance, the ECB’s
TARGET2 cut-off time is 5pm CEST. Every bank connected to a CSM enforces
cut-off times with their own customers so that banks can process payments orders
with other banks and CSMs, and close books for the day.

Real-time schemes and the corresponding CSMs, such as TIPS for SEPA instant
credit transfer payments, usually run 24 / 7 / 365 and are not subject to cut-off
times, except for punctual planned maintenance operations.

SEPA Guide 18
Overview of SEPA Payment Schemes
Maximum Days &
SEPA Maximum Credit Time of
Scheme Mode Type Amount Time Operations Repudiable

Business
Credit 2 business
Push One-off No limit days / Yes
Transfer days
hours

Instant
10 24 / 7 /
Credit Push One-off €100,000 No
seconds 365
Transfer

Business
Direct No limit 2 business
Pull Recurring days / No
Debit Core days
hours

Business
Direct No limit 1 business
Pull Recurring days / No
Debit B2B day
hours

Request-
Push One-off Depends Depends Depends Depends
to-Pay

SEPA Credit Transfer

A SEPA credit transfer (shortened to SCT) is a payment sent by the debtor (or payer)
to the creditor (or payee).

It has a maximum execution time of one business day and a maximum credit time of
two business days, from the moment it has been instructed by the debtor to its PSP.
SEPA credit transfers are only processed during business days and business hours.

There is no minimum or maximum amount. No fees can be deducted from the

payment, which means that the full amount is always credited on the creditor’s
account.

A SEPA credit transfer can be recalled by the originator PSP within 10 business days
for technical reasons, such as duplicate sending or technical problems, and within 13
months in case of fraud.

SEPA Guide 19
SEPA credit transfers are used for a variety of everyday use cases, including
consumer-to-consumer bank transfers, regular salary payments, and insurance
disbursement payouts.

SEPA Instant Credit Transfer

SEPA instant credit transfer (shortened to SCT Inst) is the most recent SEPA
payment type. It is a much faster version of a SEPA credit transfer, with a maximum
time to credit of 10 seconds. SEPA instant credit transfers are processed entirely
automatically, 24 / 7 / 365.

The debtor’s bank is notified by the creditor’s bank that the payment has been
credited on the creditor’s account, which enables it to notify its customer in return.

Unlike a SEPA credit transfer, a SEPA instant credit transfer cannot be repudiated. It
cannot be cancelled and cannot be returned. It thus offers a much higher level of
guarantee to the creditor.

SEPA instant credit transfers enable new use cases such as on-demand salary
advances, real-time health insurance repayments, emergency payments, and secure
online purchases. They also enable companies to reduce working capital
requirements and improve cash flow by collecting payments faster.

SEPA Direct Debit Core

A SEPA direct debit core (shortened to SDD core) is a payment pulled and debited
from the debtor’s account and credited to the creditor’s account. It requires a
mandate from the debtor to the creditor, which authorises the creditor to debit the
debtor’s account under certain pre-agreed conditions.

The mandate is identified by a unique mandate reference (or UMR). The creditor is
identified by a creditor identifier, which is usually assigned by the national bank of
the country of the creditor.

SEPA direct debits are commonly used for recurring payments such as rent, utilities,
software subscriptions, loan repayments, etc.

SEPA Guide 20
A SEPA direct debit core must be initiated between two weeks and two business
days before its due date. It can be rejected by the debtor’s bank until five days after
its due date, for instance if the account has been closed. The debtor needs to be
notified two weeks in advance of the settlement date unless the debtor explicitly
waives the notification.

A SEPA direct debit can be refunded up to eight weeks after execution, even if there
was a valid mandate and even if it had been authorised or up to 13 months after
execution if there was no valid mandate or if it was not authorised.

SEPA Direct Debit B2B

A SEPA direct debit business-to-business (called SEPA direct debit B2B, shortened
to SDD B2B) is similar to SEPA direct debit core, with one major difference.

Unlike with a SEPA direct debit core, a mandate must be sent to and registered by
the debtor’s PSP to process a SEPA direct debit B2B. The debtor’s PSP is responsible
for verifying that a SEPA direct debit B2B corresponds to a valid mandate before
executing the payment and debiting the debtor’s account.

SEPA Guide 21
As a result of this extra step and security for the debtor, a SEPA direct debit B2B
cannot be refunded by the payer if there was a valid mandate and if it had been
authorised, unlike a SEPA direct debit core. The direct debit can be refunded up to
13 months after execution if there was no valid mandate or if it was not authorised.

A SEPA direct debit B2B must be initiated between two weeks and one business day
before its due date. Unlike with a SEPA direct debit core, a pre-notification of the
debtor is not required.

The debtor’s PSP may still return the payment up to three days after the execution
for technical reasons or because the debtor PSP is unable to accept the collection
for other reasons, such as the account being closed, the customer being deceased,
the account not accepting direct debit, or the debtor refusing the debit.

SEPA direct debits B2B are used between companies and with tax authorities.
Common use cases include repaying loans, paying taxes, or paying for large
purchases.

SEPA Guide 22
SEPA Request-to-Pay
Introduced in 2020, SEPA request-to-pay (SRTP) is a messaging functionality that
aims at facilitating account-to-account payments. It is not a payment scheme or
method in itself, but a way to request the initiation of a payment.

The payment initiation request is conducted over a secure digital channel and offers
several payment options to payers, with the payee deciding the options for
acceptance and initiation timelines.

Payment acceptance options are:

✓ Accept now: the request-to-pay must be accepted immediately

✓ Accept later: the request-to-pay can be accepted at a later time

Payment initiation options are:

✓ Pay now: the request-to-pay must be paid by the payer immediately, at the
acceptance time

✓ Pay later: the payment is initiated at a later term than the acceptance time

Once received by the payer in a secure channel, the payment initiation can be
rejected or accepted. If accepted, the payment will then be initiated at the agreed
date. From a security perspective, the validation of the payment will occur in the
payer’s banking environment, with the payer and payee receiving a confirmation that
the payment has been made.

The aim of SEPA request-to-pay is to provide beneficiaries with greater control over
their payment collections and facilitate accounting reconciliations. Payment initiation
requests can be linked to an invoice or any other document with exact references,
such as invoice numbers, payment amounts, and customer identification.

As of July 2022, there are no active users of SEPA request-to-pay. The next
rulebook on the SEPA request-to-pay is to be published by the EPC in November
2022 and will have a bearing on how fast SEPA request-to-pay will be adopted.

SEPA Guide 23
SEPA Payments in Numbers
Payment statistics in the SEPA are maintained by the ECB and published every year
in July for the previous year. There are some limitations to this data when it comes to
understanding payments executed throughout SEPA. There is no data available for
SEPA direct debit B2B as well as SEPA instant credit transfer payments. Additionally,
payment statistics for euro payments in non-euro countries and non-European
Economic Area countries are not available.

2021 Payment Landscape

In 2021, the total number of non-cash payments in the eurozone, including all
payment methods, increased to 114.2 billion, up 12.5% from 2020. The
corresponding total value increased to €197.0 trillion, up 18.6% from 2020.

The number of credit transfers within the euro area increased to 25.1 billion (up
8.6%) and their total value increased to €184.2 trillion (up 19.3%). The number of
direct debits within the euro area increased in 2021 to 23.2 billion (up 5.8%) and their
total value increased to €7.3 trillion (up 11.1%).

Card payments accounted for 49% of the total number of payments, while credit
transfers accounted for 22% and direct debits for 20% of all payments.

Credit transfers accounted for the largest value at 184 trillion and 93% of the total
value sent. The next two largest payment methods are direct debit (accounting for
4% of total value) and cards (2% of total value).

SEPA Guide 24
 Number of Share of Value of Share of Value per
Eurozone Payments Number of Payments (in Value of Payment
2021 (in Billion) Payments Trillion Euros) Payments (in Euros)

Credit Transfers 25.1 22% 184.2 93% 7,350

Direct Debit 23.2 20% 7.3 4% 316

Card 54.8 49% 3.3 2% 60

E-money 5.8 5% 0.3 <1% 51

Cheque 1.3 1% 1.4 1% 1,101

Others 4.1 3% 0.4 <1% 96

Total 114.2 100% 197.0 100% 1,725

Source: European Central Bank Statistical Warehouse, 2021

SEPA Payments
In 2021, SEPA credit transfers and SEPA direct debits core accounted for
respectively 96% and 99% of all transfers and debits sent in the eurozone in volume.
The remaining payments are being processed on other payment schemes. While
they were mostly initiated electronically (only 6% of credit transfers are initiated
through paper or in-person orders), 55% of SEPA credit transfers were executed
through single payments orders (including online banking), while 94% of SEPA direct
debit were executed in a file and batch manner.

Credit Transfers Direct Debits

Total Number of Payments (in Billion) 25.1 23.2

% SEPA Payments 96% 99%

% Initiated Electronically 94% 100%

% File / Batched-based 40% 94%

% Single Payments (All) 55% 6%

% Single Payments (Online Banking) 15% 0%

Source: European Central Bank Statistical Warehouse, 2021

SEPA Guide 25
In 2021, SEPA payments were processed by approximately 3,900 direct and indirect
participants registered with the European Payments Council. As expected given their
maturity, SEPA credit transfer and SEPA direct debit core schemes have the largest
numbers of registered participants.

SEPA Scheme Number of Participants

Credit Transfer 3,872

Direct Debit Core 3,100

Instant Credit Transfer 2,360

Direct Debit B2B 2,646

Source: European Payments Council, July 2022

SEPA Credit Transfer and SEPA Direct Debit trends

The number of SEPA credit transfers grew by 5.8% per year between 2017 and 2021.
Combined with a 2.1% annual growth in average payment size, the total value of
SEPA credit transfers grew by 8% per year over the same period. On the contrary,
SEPA direct debits saw a slower growth of 3.8% per year, while the average size of a
direct debit declined by 0.8% per year, resulting in a 3% annual growth in total value
of SEPA direct debits. Both payment methods grew slower than card payments over
the period, at 8.8% per year.

17-21
2017 2018 2019 2020 2021 CAGR

Credit Transfers (in Billion) 20.0 21.0 22.3 23.1 25.1 5.8%

Credit Transfers (€, in Billion) 135.7 134.0 142.3 154.5 184.2 8.0%

Value per Credit Transfer (in Euros) 6,774 6,389 6,368 6,691 7,350 2.1%

Direct Debits (in Billion) 20.0 20.4 21.0 21.9 23.2 3.8%

Direct Debits (€, in Billion) 5.9 6.1 6.4 6.0 6.6 3.0%

Value per Direct Debit (in Euros) 295 300 304 276 286 -0.8%

Source: European Central Bank Statistical Warehouse, 2017-2021

SEPA Guide 26
Emerging Payment Methods
To capture early trends on emerging payment methods not captured in the ECB
data, we can look at the data of individual CSMs. Looking at EBA Clearing CSMs
STEP1, STEP2, and RT1, which accounted for 50% of the value payments in the EU in
2020, SEPA instant credit transfer is currently the fastest growing payment method
among payments processed by EBA Clearing. With the introduction of TIPS by the
Eurosystem allowing for indirect participants, the growth of SEPA instant credit
transfer is likely to accelerate.

H1 2021-H2 2022 Growth

EBA Clearing Payments In Volume In Value

SEPA Credit Transfer 7.0% 17.1%

SEPA Direct Debit Core 5.3% 11.1%

SEPA Direct Debit BtoB 6.6% 29.4%

SEPA Credit Transfer Instant 46.5% 50.7%

Total 6.8% 17.4%

Source: EBA Clearing, Jan 2021-July 2022

SEPA Guide 27
SEPA Indirect and Direct
Participant Flows
In addition to regular SEPA payment flows, SEPA indirect and direct participants have
access to and must be able to support additional payment flows. These flows are
known as related transactions or R transactions.

Returns
A SEPA indirect or direct participant must be able to return a SEPA credit transfer
that was previously received or a SEPA direct debit that was previously sent.
Similarly, they must be able to receive a return related to a SEPA credit transfer
previously sent or a SEPA direct debit previously debited. A return can be proactive
or be sent in response to a return request, also called a recall.

A return includes a reason code that explains the cause of the return. Common
reason codes include AC01 for an incorrect account number, AC06 for a blocked
bank account, and AM04 for insufficient funds. A return sent in response to a return
request always has FOCR (for “following cancellation request”) as a reason code.

Recalls
A SEPA direct or indirect participant must also be able to recall a SEPA credit transfer
that was previously sent or a SEPA direct debit core that was previously debited.
Similarly, they must be able to answer a recall received from another SEPA direct or
indirect participant.

The recall includes a reference to the corresponding payment as well as a reason

code. The three reason codes authorised for recalls are DUPL for a duplicate
payment, TECH for a technical error, and FRAD for a fraudulent payment.

When receiving a recall, a SEPA direct or indirect participant can either answer
positively, returning FOCR as a reason code, or negatively, with reason codes

SEPA Guide 28
including LEGL for legal reasons, NOOR if no original payment was sent or received, or
ARDT if the payment had already been returned.

Inquiries
Not answering a recall can result in an inquiry message. This message is a reminder
of a recall which has remained unanswered. SEPA direct and indirect participants are
expected to accept or deny the inquiry by responding to the related recall.

Reason Codes
When sending R transactions, SEPA indirect or direct participants are expected to
use standard reason codes. Just like SEPA messages, SEPA reason codes rely on
ISO standards and use ISO external codes.

Reason Code Description

AC01 Incorrect account number

AC04 Account closed

AC06 Account blocked

DUPL Duplicate payment

TECH Technical problem

FRAD Fraudulent origin

FOCR Following cancellation request

NOOR No original payment received

SEPA Guide 29
SEPA and ISO 20022 Messages
ISO 20022 Messages
ISO 20022 is a standard for data exchange between financial institutions such as
PSPs and CSMs. It includes business processes as well as message formats. ISO
20022 messages are text files that use the XML syntax.

The European Payments Council has enforced the use of ISO 20022 messages
throughout the SEPA zone to harmonise payment- and account-related data. As a
result, the SEPA has led the way in terms of adoption, with major countries such as
the United Kingdom, the United States, Canada, and Australia in the early stage of
adopting ISO 20022 too.

SEPA Guide 30
SEPA Guide 31
Understanding ISO 20022 XML Messages Used
in SEPA
The first four letters represent the message category. Combined with the following
three digits, it represents the message identifier. The last five digits represent the
message version.

SEPA uses 3 message categories:

Message Message
Category Code Category Name Description

Messages used by corporate customers to send

PAIN Payment initiation
payment instructions to their banks.

Messages used by SEPA direct and indirect

Payment clearing participants to send and receive payment instructions
PACS
and settlement and related operations to and from their banks and /
or CSMs.

Messages used by banks to send account reports,

including balances and transactions, to their
Cash customers.
CAMT
management
Messages also used by customers to request the
cancellation of a payment by their banks.

SEPA Guide 32
Payments
SEPA payments are sent and received using PAIN and PACS ISO 20022 XML
messages. PAIN and PACS messages include information regarding the account
holder, the payment, and the beneficiary. More than 25 fields must be populated to
send a single payment, including multiple technical IDs and payment
scheme-specific details.

Different PAIN and PACS messages are used depending on the payment method
used as well as customer type. PAIN messages are used by corporates, while PACS
are used by SEPA indirect and direct participants. A pain.008.001.02 message
used by a corporate customer to send a SEPA direct debit instruction will contain
payment scheme-specific details, such as the creditor identifier and the unique
reference mandate.

Corporate SEPA
Category Payment Method Customer Participant

SEPA Credit Transfer pain.001.001.03 pacs.008.001.02

SEPA Credit Transfer Instant pain.001.001.03 pacs.008.001.02

Payments
SEPA Direct Debit Core pain.008.001.02 pacs.003.001.02

SEPA Direct Debit B2B pain.008.001.02 pacs.003.001.02

Return (SCT / SDD) N/A pacs.004.001.02

Reversal (SDD) pain.007.001.02 pacs.007.001.02

Recall (SCT) N/A camt.056.001.01

Related
transactions Recall request positive
N/A pacs.004.001.02
response

Recall request negative

N/A camt.029.001.03
response

Payment status request N/A camt.028.001.01

Inquiries Non-receipt claim N/A camt.027.001.03

Resolution of investigation N/A camt.029.001.03

SEPA Guide 33
Payment Status Reports
In addition to payment files, SEPA payments rely on payment status report (or PSR)
files. PSRs are generated and sent by banks to their customers to notify customers
of the processing status of their payment files.

Two common types of PSRs are file status reports and payment status reports. Both
types of PSRs use the pain.002.001.03 ISO 20022 message format.

PSR support and capabilities are not standardised and vary from bank to bank. Some
banks only partially support PSRs or may not support PSRs at all. When this
happens, customers are forced to perform indirect reconciliations to update the
status of their payments. Such reconciliations can include marking a payment as:

✓ Executed if it has not been explicitly rejected

✓ Executed if it can be reconciled with a transaction posted on the account

✓ Rejected if it cannot be reconciled with a transaction posted on the account

after a certain period

File Status Report

A file status report (FSR) indicates if the payment file could be processed or has
been rejected by the bank because of an invalid format. An FSR is mostly meant for
technical controls and format validations.

Payment Status Reports

A payment status report (PSR) indicates if and how the payments contained in the
payment file have been processed by the bank. Common processing statuses
include:

SEPA Guide 34
Status
Code Description

ACCP Payments have passed technical and functional validations.

ACSP Payments have been accepted and processed.

PNDG Payments have been put on hold. A reason is included.

RJCT Payments have been rejected by the bank.

ACSC Payments have been processed and settled.

At least one payment of the file is accepted and processed, and at least
PART
one payment of the file is rejected.

PSRs contain status updates at payment group and individual payment levels.
Statuses can either be final or non-final. A final status means that the payment
cannot be changed to another status later on. A non-final status means that the
status of the payment will likely evolve later on.

If all the payments of a PSR have the same status, then the whole group can be
tagged with this status. Conversely, if the group contains payments that have
different statuses, the group status will be PART and every payment details will
contain the individual payment status. The following table summarises the different
statuses payments can have and whether the status is at a payment group or
individual payment level:

Payment Group Individual

Status Code Level Payment Level

ACCP ✅ Yes ✅ Yes

ACSP ✅ Yes ✅ Yes
PNDG ✅ Yes ✅ Yes
RJCT ✅ Yes ✅ Yes
ACSC ✅ Yes ✅ Yes
PART ✅ Yes ❌ No

SEPA Guide 35
Account Reports
Although not strictly in the scope of SEPA, account reports are an integral part of
managing payments and bank accounts.

Account Report Types

ISO 20022 specifies three distinct types of account reports and the corresponding
CAMT messages.

Account Report Camt Message Description

Bank to customer
camt.052.001.10 Intraday balances and transactions.
account report

Bank to customer
camt.053.001.10 Prior-day balances and transactions.
statement

Bank to customer debit Transaction data every time a debit or

camt.054.001.10
/ credit notification credit is booked on the account.

Depending on their capabilities, banks might generate camt.052 intraday account

reports every few hours and camt.054, debit / credit notification account reports
every few minutes, and camt.053 prior-day account reports shortly before or after
midnight.

Although they contain the same transactions, debit / credit notification, intra-day,
and prior-day account reports can be difficult to reconcile, as they do not always use
a common ID for a given transaction.

Account Balance Types

The ISO 20022 standard specifies the different types of balances which can be
included in account reports.

SEPA Guide 36
Balance Balance
Code Type Description

Closing Closing balance of amount of money that is at the disposal of

CLAV
available the account owner on the date specified.

Balance of the account at the end of the pre-agreed account

Closing reporting period. It is the sum of the opening booked balance
CLBD
booked at the beginning of the period and all entries booked to the
account during the pre-agreed account reporting period.

Forward Forward available balance of money that is at the disposal of

FWAV
available the account owner on the date specified.

INFO Information Balance for informational purposes.

Available balance calculated in the course of the account

servicer's business day, at the time specified, and subject to
Interim
ITAV further changes during the business day. The interim balance
available
is calculated on the basis of booked credit and debit items
during the calculation time/period specified.

Balance calculated in the course of the account servicer's

business day, at the time specified, and subject to further
Interim
ITBD changes during the business day. The interim balance is
booked
calculated on the basis of booked credit and debit items
during the calculation time/period specified.

Book balance of the account at the beginning of the account

Opening
OPAV reporting period. It always equals the closing book balance
available
from the previous report.

Book balance of the account at the beginning of the account

Opening
OPBD reporting period. It always equals the closing book balance
booked
from the previous report.

Balance of the account at the previously closed account

reporting period. The opening booked balance for the new
Previously
period has to be equal to this balance. Usage: the previously
PRCD closed
booked closing balance should equal (inclusive date) the
booked
booked closing balance of the date it references and equal
the actual booked opening balance of the current date.

Balance, composed of booked entries and pending items

known at the time of calculation, which projects the end of
XPCD Expected
day balance if everything is booked on the account and no
other entry is posted.

The most common types of balances are OPAV, OPBD, CLAV, and CLBD.

SEPA Guide 37
Transaction Data
In addition to account balances, account reports provide transaction data. A
transaction entry contains the following information:

Field Description Mandatory

Amount The amount of the transaction. ✅ Yes

Currency The currency of the transaction. ✅ Yes
Value Date
The date when the funds become available or
unavailable.
✅ Yes
Booking Date
The date when the transaction is posted on the
account.
✅ Yes
Bank Transaction
Code
A standardised set of code which defines the domain,
family and sub-family of the transaction.
✅ Yes
Remittance
Information
The description of the payment, as inputted by the
payment originator or the bank holding the account.
❌ No
Account Holder
Name
The name of the account holder. ❌ No
Account Holder
Account Number
The account number of the account held by the bank. ❌ No
Counterparty Name The name of the counterparty. ❌ No
Counterparty
Account Number
The account number of the counterparty. ❌ No
End-to-end ID
The end-to-end ID of the payment, as inputted by the
payment originator or generated by the payment
originator’s system.
❌ No
As payments go through multiple parties throughout their lifecycle, including at least
two PSPs and one CSM, the payment data might be transformed or lost, depending
on the PSP or CSM’s capabilities. This can result in difficulties in understanding and
reconciling transactions.

Bank Transaction Codes

Bank transaction codes are a harmonised set of codes defined by the ISO 20022
standard, aiming to categorise transactions by assigning them domain, family, and
sub-family codes. Some bank transaction codes frequently used include:

SEPA Guide 38
 Domain Sub-family Sub-family
Domain Code Name Family Code Family Name Code Name

Received
SEPA Credit
PMNT Payments RCDT Credit ESCT
Transfer
Transfers

Merchant
Credit Card
PMNT Payments MCRD Card POSC
Payment
Transactions

Received
Real-time SEPA Credit
PMNT Payments RRCT ESCT
Credit Transfer
Transfers

Received
PMNT Payments RCHQ CCHQ Cheque
Cheques

Miscellane-
Account
ACMT MDOP ous Debit COMM Commission
Management
Operations

Foreign
FORX SPOT Spots N/A N/A
Exchange

SEPA Guide 39
Other Payment Networks and
Schemes
While SEPA now dominates euro transfers in the SEPA, there are a number of local
and global payment networks and schemes that facilitate non-euro payments for
European companies.

SWIFT Payments
Created in the 1970s, the Society for Worldwide Interbank Financial
Telecommunication (SWIFT) is a private organisation based in Belgium that provides
global financial institutions, banks, and companies with a unified messaging system
to send and receive payment instructions. SWIFTNet, one of SWIFT’s services, is a
global payment network used by over 11,000 SWIFT members in more than 200
countries, as of June 2022.

SWIFT payments are processed in 1 to 4 days. They cost between €5 and €50, with
fees being deducted by sending, correspondent, or beneficiary banks, depending on
the fee mode chosen by the creditor:

✓ BEN: all fees charged to the beneficiary

✓ SHA: fees shared between the beneficiary and the debtor

✓ OUR: all fees charged to the debtor

In contrast to SEPA payments which are processed, cleared, and settled by CSMs,
SWIFT simply forwards payment instructions between two banks. It is the
responsibility of banks to clear and settle payments, usually through local settlement
systems (such as TARGET2 in Europe) or using correspondent banking accounts for
cross-border payments.

Correspondent banking is a practice often used by partner banks to clear and settle
funds in a one-to-one relationship without relying on a CSM. It works as follows.
Bank Alpha opens an account A1 at bank Beta (called nostro account from Alpha’s
point of view) and bank Beta opens an account B1 at bank Alpha (called vostro

SEPA Guide 40
account also from Alpha’s point of view). Each time an Alpha customer wants to send
a payment to a customer that has an account at Beta, Alpha and Beta can clear and
settle the payment after the order was transmitted through the SWIFT network.

In the background, payment instructions are sent and received by banks using
SWIFT’s proprietary MT messages, which are based on flat files. SWIFT MT
messages come in various flavours. MT103 messages are used to send payment
instructions, while MT940 messages contain account reports. In late 2021, SWIFT
started migrating to a new MX message format based on the ISO 20022 XML
standard, which will ultimately become the de-facto format used by companies,
banks, and software providers.

In 2017, SWIFT launched Global Payment Innovation (GPI), a tracking feature that
aims to accelerate SWIFT payments and to facilitate their tracking. Payments
tracked using SWIFT GPI are processed within 30 minutes to 24 hours, far below the
usual 1 to 4 days for ordinary SWIFT payments. As of 2022, GPI is used by more than
4,000 SWIFT members.

UK Local Schemes
The UK has three distinct payment schemes which are similar to the different SEPA
schemes that facilitate credit transfers, direct debits, and instant credit transfers. In
the UK, local participants use Bacs direct credit and direct debit, CHAPS, and the
Faster Payments System.

Unlike the SEPA where there are multiple local and pan-European CSMs, the UK has
several clearing houses, but only one settlement organisation, the Bank of England,
the UK’s central bank.

Every bank in the UK is identified by its sort code, a six-digit code that is equivalent
in use to the BIC in the SEPA zone or the SWIFT code used for cross-border
payments. Every bank account has a unique account number composed of eight
digits.

SEPA Guide 41
Bacs
Bacs (for Bankers' Automated Clearing System) is the UK’s leading payment scheme
and is operated by Pay.uk. Bacs processes credit transfers and direct debits in
approximately three days. The maximum payment size is £20M for individuals and
businesses, but can be extended to £999M for banks and governments. Bacs uses
the Standard 18 file format, a text-based structured format, but has started a
migration to the ISO 20022 standard.

CHAPS
To complement Bacs’ three-days processing, CHAPS (for Clearing House Automated
Payment System) offers same-day settlement for payments sent before 3 PM. This
high-priority benefit comes at a price: a CHAPS payment costs around £30. As a
result, CHAPS is the go-to payment scheme for urgent, large-amount payments.
CHAPS payments are processed by banks and the Bank of England using the SWIFT
MT format. However, as with Bacs, CHAPS started a migration to the ISO 20022
standard.

Faster Payments Service

The Faster Payments Service (or FPS) was officially launched in 2008 to meet the
need for instant payment capabilities. Similar to SEPA instant credit transfer, FPS can
be used to process payments of up to £1M in under two hours, 24 / 7, for as cheap
as £0.05. Its speed, cost, and high availability made FPS the second most popular
payment scheme in the UK. FPS is based on the ISO 8583 text file standard, with a
future move to the ISO 20022 standard.

New Payments Architecture

In 2017, Pay.uk initiated work on the New Payments Architecture (NPA), a new
modern payment infrastructure that could ultimately replace both Bacs and FPS.
NPA will be based on the ISO 20022 standard in order to be aligned with other
modern payment systems. However, the release date for NPA is yet to be confirmed.

SEPA Guide 42
Numeral for SEPA Payments
Numeral is a payment operations platform abstracting the complexity of bank direct
integrations and manual file management. By exposing a single API across banks
and payment methods, Numeral helps companies accelerate SEPA payments and
reconciliations through real-time connectivity to banks, robust automations, and
built-in controls.

Numeral can be deployed in just weeks thanks to a developer-friendly API and a

central dashboard. It creates value for finance and operations teams through:

✓ Faster payments – augmenting payment operations with real-time updates

and fast API integrations to all systems. With Numeral, companies can create
payment flows in their products without the delay and cost created by the
intermediation of a payment service provider.

✓ Time saved – removing manual payment file management and automating

bank reconciliations. Due to continuous payment updates, finance and
operations, teams also spend less time troubleshooting errors.

✓ Improved control – leveraging built-in permissions and approvals. The

Numeral central dashboard allows the creation of custom approval rules and
visibility on all payments initiated across banks.

With Numeral, companies can design workflows and automate payments throughout
their entire lifecycle:

✓ Payments – Create and validate payments across multiple payment

methods, such as SEPA credit transfer, SEPA instant credit transfer, SEPA
direct debit, and SWIFT.

✓ Reconciliations – Automatically reconcile payments and accounts to close

books faster.

✓ Counterparties – Create, onboard, verify, and assign virtual account

numbers to counterparties, such as customers, vendors, or partners.

✓ Ledgers – Track all financial flows across bank accounts, internal accounts,
and counterparties with double-entry accounting and immutable ledgers.

SEPA Guide 43
 ✓ Real-time notifications – Receive real-time notifications as payments are
sent, received, or reconciled.

Numeral is loved by developers for its clean API documentations, making it easy to
programmatically initiate payments without the steep learning curve of working with
banks’ systems and partial documentations.

Numeral’s customers include French unicorns Spendesk (company spend solution)

and Swile (employee benefit solution).

If you would like to learn more, our Payments Advisors are here to help. Email us at
[email protected] and you will hear back from us shortly.

SEPA Guide 44
Appendixes
Glossary
Term Definition

BIC Bank identifier code

CAMT Cash management ISO 20022 message

CSM Clearing and settlement mechanism

ECB European Central Bank

EPC European Payments Council

IBAN International bank account number

ISO standard for electronic data interchange between financial

ISO 20022
institutions

FSR File status report

PACS Payment clearing and settlement ISO 20022 message

PAIN Payments initiation ISO 20022 message

PSD1 / PSD2 European Commission’s payment services directives 1 and 2

PSP Payment service provider, either bank or non-bank

PSR Payment status report

RTP SEPA Request-to-Pay

SCT SEPA Credit Transfer

SCT Inst SEPA Instant Credit Transfer

SDD Core SEPA Direct Debit Core

SDD B2B SEPA Direct Business-to-Business

SEPA Single Euro Payments Area

SEPA Guide 45
IBAN Format per Country
Country Country Code Length

SEPA countries with euro as their currency

Andorra AD 24

Austria AT 20

Belgium BE 16

Cyprus CY 28

Estonia EE 20

Finland FI 18

France FR 27

Germany DE 22

Gibraltar GI 23

Greece GR 27

Ireland IE 22

Italy IT 27

Latvia LV 21

Lithuania LT 20

Luxembourg LU 20

Malta MT 31

Monaco MC 27

Netherlands NL 18

Portugal PT 25

San Marino SM 27

Slovakia SK 24

Slovenia SI 19

Spain ES 24

SEPA Guide 46
Country Country Code Length

SEPA countries where euro is not the currency

Bulgaria BG 22

Croatia HR 21

Czech Republic CZ 24

Denmark DK 18

Gibraltar GI 23

Hungary HU 28

Iceland IS 26

Liechtenstein LI 21

Norway ​NO 15

Poland PL 28

Romania RO 24

Sweden SE 24

Switzerland CH 21

SEPA Guide 47
IBAN Verification Algorithm
IBAN can be verified using the following steps:

1. Check that the IBAN length matches the expected length for the country

2. Move the first four characters to the end

3. Convert the IBAN to an integer by replacing each letter with two digits, where
A = 10, B = 11, up to Z = 35

4. Apply a mod 97 operation to calculate the remainder

If the remainder is equal to 1, the check digit test is passed and the IBAN might be
valid.

The verification algorithm only allows us to verify the syntax of the IBAN. A valid
IBAN might correspond to an account that does not exist or has been closed.
Services such as SEPA Mail Diamond enable payment originators to verify the
existence of beneficiaries’ bank accounts.

SEPA Guide 48
Bank Transaction Codes
Domain Family Sub-family
Code Code Code Description

PMNT RCDT ESCT Received SEPA Credit Transfer

PMNT ICDT XBCT Issued Cross-Border Credit Transfer

Received Cash Concentration Transaction for Intra Company

PMNT RCCN ICCT
Transfer

Received Cash Concentration Transaction for Corporate

PMNT ICCN COAT
Own Account Transfer

PMNT RDDT OODD Received One-Off Direct Debit

PMNT IDDT PMDD Issued Direct Debit Payment

PMNT RCHQ CCHQ Received Cheque

PMNT ICHQ BCHQ Issued Bank Cheque

PMNT CCRD POSC Customer Credit Card Payment

PMNT MCRD POSC Merchant Credit Card Payment

PMNT RRCT ESCT Received Real Time SEPA Credit Transfer

PMNT IRCT ESCT Issued Real Time SEPA Credit Transfer

CAMT CAPL CAJT Cash Pooling Credit Adjustments

CAMT ACCB CHRG Account Balancing Charges

LDAS FTLN PPAY Fixed Term Loans Principal Payment

LDAS NTLN RNEW Notice Loans Renewal

LDAS FTDP RPMNT Fixed Term Deposit Repayment

LDAS NTDP RPMT Notice Deposits Repayment

FORX SPOT FEES Foreign Exchange Spot Fees

FORX FWRD COMM Foreign Exchange Forward Commission

SECU COLL MARG Collateral Management Margin Payment

SECU CORP DRIP Corporate Dividend Reinvestment

CMDT FTUR COMM Commodities Future Commission

CDMT OPTN COMM Commodities Option Commission

SEPA Guide 49
Further Readings
✓ Mègue, Jean-Paul. SEPA Credit Transfer, How to Understand and Add value
to your SCT Payment Project, October 2018.

✓ European Central Bank Statistical Warehouse, https://sdw.ecb.europa.eu

✓ European Payments Council, https://www.europeanpaymentscouncil.eu

✓ Euro Banking Association, https://www.eba.europa.eu

SEPA Guide 50
Authors
This guide has been authored by the team at Numeral (numeral.io).

Édouard Mandon
Co-founder & CEO
[email protected]

Lina Mechat
Product Manager
[email protected]

Pierre Guilhou
Product Manager
[email protected]

Victor Mithouard
Head of Marketing
[email protected]

SEPA Guide 51