SEPA and SWIFT are the most widely used multinational payment systems in the world today.

The key distinction between the two is as follows: SEPA (or Single Euro Payment Area) allows for unlimited payments in Euros within the Eurozone, with the recipient's account number expected to be in the IBAN format. SEPA payments are made between the 28 EU countries, as well as Norway, Iceland, Switzerland, and Liechtenstein, all of which are Schengen Area members. SWIFT (Society for Worldwide Interbank Financial Telecommunications) is an international system that is widely used in over 210 countries and by over 11,000 banks.

Unified Europe – unified financial processes

In fact, if payments are made in euros and inside Europe, ordinary consumers, such as entrepreneurs, don't notice much of a difference in which system to use – SEPA or SWIFT.

There are, though, certain complexities. For example, the SWIFT system, which was established under Belgian legislation, has been under the jurisdiction of the United States State Department since 2011, which controls all payments. However, the SEPA system is purely intra-European, and payment oversight is carried out by European structures such as tax agencies.

Let's go over it in greater depth. The SEPA system went public in 2008, and within a few years, almost all banks in the EU and the Schengen Area were actively using it. The European Payment Council oversaw the introduction of SEPA. At the time, various payment schemes existed in Eurozone countries, each with its own set of rules and tools, which often confused the process of making payments in euros. As SEPA was implemented, the disparities between domestic and foreign payments in euros were effectively removed within the unified system.

Large organizations often use a single set of financial instruments, guidelines, and protocols when making SEPA payments. SEPA has a significant benefit in that when a payment is made between European institutions through this unified scheme, banks are allowed to refund the entire amount to the recipient's account without extra fees. Furthermore, payments are made quickly: within one business day of the document being processed. Banks operating in the SEPA scheme process foreign payments between individuals and businesses in Europe in the same manner as they process domestic payments.

Consumer interests are being protected by an innovative project.

SEPA, according to the European Payment Council, is an ambitious project that involves different regulatory frameworks, payment processing providers, banks, and, of course, consumers. SEPA, from a legal perspective, is a compilation of standardized rules and guidelines introduced by the aforementioned European Payment Council. The project's initial focus was on three areas: SEPA direct debit, SEPA credit transfer and SEPA's own payment cards.

It is also necessary to note that SEPA scheme participants are required to “strengthen consumer rights,” as originally stated in the European Payment Council directive. Payment operations have been more stable, and SEPA participants have found it simpler and quicker to contest any unexpected cases of money movements than those in the international financial sector.

Some local SEPA analogues for local currencies are also worth mentioning. For example, in England, long before all the talk about exiting the EU, there was a homegrown scheme geared toward British pounds – the Faster Payments Service (FPS). The British Bankers' Association spearheaded the creation of this scheme. It is entirely internal and is intended for customers of a network of British banks in order to minimize payment processing time between customer accounts. Payments of up to 250,000 pounds, for example, are normally processed within a day – three days at most. Banks do not charge their customers any fees for money transfers inside the FPS framework once transactions are completed.

In China, they use another internal payment system. China UnionPay is the country's biggest payment system on the global economy. Although, most notably, the People's Bank of China (the People's Republic of China's central bank) has introduced an analogue of SWIFT – the international payment system CIPS (Chinese International Payment System), which helps minimize yuan transaction costs as well as payment processing time.

But let us return to SEPA and SWIFT for a moment. When addressing international financial transactions, it is important to remember that the SEPA system, which was developed at the initiative of EU legislators, operates only within Europe and not internationally. However, the SWIFT system is global in scope.

SWIFT stands for security and speed.

Yes, you can always hear of a specific way of exchanging money from one bank account to another in the internet world – wire transfer. A “wire transfer” is simply a “wire transfer.” This applies to SWIFT's ownership of the transatlantic “bank cable.” It became common for a “wire transfer” to be referred to as a SWIFT transfer: the same thing. SWIFT is regarded as a stable messaging framework for banks. When a wire transfer is made, the bank sends information about the transfer through the SWIFT system, which includes the number, IBAN, bank code, and so on.

The most significant benefit of foreign transfers using the SWIFT system is their global availability. Furthermore, the SWIFT system employs correspondent banks, which, while not directly linked to it, collaborate with it.

Each SWIFT system bank has its own unique code. The money is transferred directly to the account of a person or legal party during the payment process. Regardless of the currency of the account from which the payment is made, the sender may choose a currency for the transfer.Since the SWIFT system now includes over 11,000 financial companies (mostly banks) from 210 countries, money transfers from one bank account to another are reasonably reliable and fast.