The Single Euro Payments Area (SEPA) is an initiative of the European banking industry that will streamline all electronic payments in the euro area – whether by credit card, debit card, bank transfer or direct debits.



While many nations have raised concerns about how supporters will react to new SEPA-compliant donation forms and increased banking charges imposed upon them, others have made huge strides in lobbying for better rates from banks. SEPA poses both an opportunity and a threat, one that nonprofits must address quickly before regulation comes in early next year.

For cross-border payments to or from any country within the eurozone, transactions must already comply with SEPA legislation. But, for domestic transactions, the European Commission’s deadline of 1st February 2014 has been extended to 1st August 2014, giving further transitional time for banks and payment service providers to complete transactions that do not comply with SEPA regulations. This means that all bank transfers and cross-country payments within the eurozone have to be made with the use of IBAN and BIC. (Non Euro countries have an extended deadline of 31st October 2016).


Some euro nations are making full use of this six month extension, while others (like Spain) have introduced a shorter timeframe to ensure they are fully compliant before the new deadline of 1st August 2014.


A single standard for national transactions and cross-border transactions is a positive step, but change is rarely easy and nonprofits must be prepared.  All debit transactions must be transferred to the new system; a significant administrative burden for many charitable organisations. 

Günther Lutschinger, EFA President and Chief Executive of Fundraising Verband Austria, says: “The new system will affect donors as their payments are processed in a different way and charities will require more information from them. Here in Austria, tests have shown a 30% lower response rate to campaigns meeting SEPA’s requirement and that has been a big worry for nonprofits."


“I believe that donors will adapt, but that we will have to educate them and help them with the process. We need to do our homework, thinking carefully about when will be the right time to make the change and how to format donation forms. At the end of the day, we must remember that this is a long-term opportunity to create a thriving market of international donors.”

Many European nations have expressed concerns about the requirement to get supporters to change their direct debits to comply and the costs of transferring this data. What is more, in many parts of Europe, banks are increasing their charges.


And yet, several nations have succeeded in lobbying national banks for better rates. The Finnish Fundraising Association, VaLa, has now negotiated a landmark agreement with Danske Bank – one of the largest financial institutions in the Nordic region, which has agreed to waive all transaction costs for donations to VaLa’s members.


VaLa’s success follows a lobbying campaign that exposed the challenges and concerns of the Finnish charity sector of meeting impending SEPA legislation. In Austria too, a similar campaign has led to discounted rates for charities now on offer from two major public banks. Many charities are now moving their bank accounts to ensure they can gain access to better rates and maximise the money given.


Charities, which collectively have hundreds of thousands of regular supporters, are in a strong lobbying position to negotiate with the banks. Despite the inevitable administrative burden that SEPA may impose on the sector, it is also a significant opportunity to promote cross-border philanthropy and to ensure the banks are minimising transaction charges wherever possible.



More regulatory briefings:

To read up about other key areas of legislatory reform and development and how they might impact your organisation, click on the links below:



Data Protection – Reform of data protection is an emotive area that has seen more than 3,000 tabled amendments to the initial proposal launched in 2012. How will the proposed centralised regulation impact charities? Read more.

VAT - Unification of VAT legislation could be the sector’s chance to tackle the estimated irrecoverable VAT bill of €6 billion once and for all. Read more.

European Foundation Statutes - a specific tool developed to help foundations better channel resources across borders, helping to promote and facilitate cross-border philanthropy. This is particularly important as it is the first time that there will be one central EU definition of charitable foundations and purposes. Read more.