Payment Institutions Are UK Financial Companies Being Disconnected from SEPA? Not So Fast.

Despite Brexit and the changing European financial landscape, the UK remains very much inside the SEPA network. While the UK is no longer part of the EU, it continues to participate in the Single Euro Payments Area (SEPA) as a third-country member.

✅ Continued Access After Brexit

Thanks to a formal application made by UK Finance and accepted by the European Payments Council (EPC), UK banks and payment institutions retain access to SEPA. This allows them to send and receive euro-denominated bank transfers across Europe, just like their EU counterparts.

📌 What this means: UK PSPs and banks can still handle SEPA Credit Transfers (SCT) and SEPA Direct Debits (SDD), maintaining operational efficiency and cross-border euro connectivity.

⚠️ But It’s Not Business As Usual

While participation remains intact, UK firms now face “third-country” status implications, such as:

Potential extra fees from European PSPs
Longer processing times due to compliance checks
Mandatory data fields, such as full address details, on outgoing transfers

This can affect end-users if PSPs don’t optimize for these post-Brexit differences.

💡 SEPA Instant? Optional but Increasingly Adopted

One area where divergence is growing is SEPA Instant Payments. Under the EU’s Instant Payments Regulation, eurozone institutions must support instant credit transfers by October 2025.

📌 However, this rule doesn’t apply to non-EU SEPA countries, including the UK.

Yet many UK institutions (especially challenger banks and fintechs) are voluntarily integrating SEPA Instant, understanding its value in:

Enhancing customer experience
Staying competitive with EU PSPs
Supporting real-time treasury operations

🧭 What’s Next for UK PSPs?

UK financial firms that want to stay relevant in the euro payments ecosystem should:

Proactively offer SEPA Instant capabilities
Streamline compliance and data handling
Monitor EU payment regulation trends, even if not directly enforceable in the UK