The different stakeholders involved in SEPA

Victor Mithouard
September 2022
min read

Several organisations are involved in standardising and operating SEPA payments, but who are they and how exactly is each organisation involved in SEPA?

In this article, we outline the key organisations behind SEPA. We examine the role each organisation plays and look at how those actors involved in a SEPA payment fit together under SEPA’s four-corner model.

Regulatory bodies

The Single Euro Payments Area (SEPA) is governed by two supranational organisations - the European Commission, and the European Payments Council.

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 payment service providers (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. 

Actors involved in the execution of a SEPA payment

Every SEPA payment involves a number of actors: the originator and the beneficiary, the PSPs holding their accounts, and clearing companies. Software providers function to connect the different actors involved in a SEPA payment.

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.

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 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.

SEPA direct vs indirect participants

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

Clearing and Settlement Mechanisms (CSMs) are invisible to end users but are nonetheless an essential piece to the SEPA puzzle. 

CSMs are responsible for executing the clearing process between PSPs. The ECB defines clearing as “the process of transmitting, reconciling and, in some cases, confirming transfer orders prior to settlement, potentially including the netting of orders and the establishment of final positions for settlement.”

A CSMs performs its role by aggregating all payment orders between two PSPs across a time frame. At a set point, the CSM then “nets” the payment orders, determining a “gross” payment amount - called the final position - which is then transferred from one PSP to another, in a final step called settlement.

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 in order 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.

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 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.

Simplify SEPA payments with Numeral

Numeral simplifies the integration of SEPA payments into payment operations. Thanks to a single API across banks and payment methods, companies can readily integrate all SEPA schemes into their payments workflows, without having to spend time on developing complex direct bank integrations. Numeral also supports fintech companies in becoming SEPA indirect participants by working together with their sponsor banks to manage interbank messaging through the Numeral API.

Contact us to schedule a demo of the Numeral API and platform or talk about your projects.

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