What will change after SEPA and why the BIC?
Globalization is advancing, and with it the standardization of payment systems. Thanks to SEPA, the traditional bank sort codes and account numbers have almost become obsolete for both private customers and companies. The following content show exactly what is behind terms such as SEPA, BIC and IBAN.
What is SEPA for?
Roughly speaking, the Single Euro Payments Area describes a financially unified Europe. Transfers from private customers to companies – or vice versa – should be easier to handle. A concrete benefit is supposed to come from the fact that foreign transfers are simply treated in the same way as domestic transfers. This also explains why the conventional account number, for example, is being dropped: whether a transfer is made from a location within Germany or from – for example – Spain, no longer makes any difference. The BIC and IBAN remain the same.
What are BIC and IBAN?
The Bank Identifier Code simply serves as an international bank code. Through this code, a single credit institution can be identified without any doubt in the entire European area. Instead of the bank code, the Bank Identifier Code is used for bank transfers. Apart from the change in the sequence of numbers and letters, nothing changes. The International Bank Account Number, on the other hand, serves as an internationally valid account number. For German accounts, it always begins with the letter sequence DE, so that the country to which the account belongs can be identified immediately. An inconvenience for private customers is the fact that this international account number is considerably longer, although the sequence of digits always follows the same pattern.
What will change with the use of SEPA?
Fortunately, not much changes for both private users and companies. The changed connection data to banks and accounts is the biggest change due to this procedure. Otherwise, no other fees will be charged for transferring funds – either domestically or abroad. Incidentally, domestic transfers between private customers will continue to be possible via the traditional connection of bank code and account number.
What are the advantages of the new system?
Transfers abroad are generally faster. If you trust banks and other credit institutions, a transfer to any other European country should only take one business day – just like domestic transfers. Before the changeover, this period could be up to a week. Furthermore, this procedure opens up interesting possibilities when working abroad: those who work in another European country but reside in Germany can still have their salary transferred to their German account. Until now, this was not possible without detours. Simplified administrative costs are also expected to save more than 100 billion euros in Europe within the next five years, from which both companies and private customers will benefit indirectly.
Will the old data still be allowed after SEPA?
Yes. Private customers of banks can continue to use the old data for the next two years. However, this only applies to domestic transfers. There, the entry of BIC and IBAN is therefore not absolutely necessary. If a transfer is made using the old pattern, the bank will automatically convert it to the new pattern. However, since this is a temporary solution, it is best to switch to IBAN and BIC as soon as possible, even nationally.
