ECB Calls for Wider SEPA Adoption as Costly Cross-Border Transfers Persist

The European Central Bank (ECB) has called for greater public awareness and use of the Single Euro Payments Area (SEPA), warning that households across south-eastern Europe continue to rely on expensive money transfer services despite the availability of cheaper cross-border payment options. In a blog post published on 3 November 2026, the ECB highlighted the gap between the expansion of Europe's integrated payment infrastructure and consumers' continued reliance on cash-based and non-bank transfer services.

SEPA currently connects 41 European countries and is designed to make cross-border euro payments as straightforward and inexpensive as domestic transfers. It provides common payment schemes and standards that allow individuals and businesses to transfer euros between participating countries without the fragmentation and additional costs that historically characterised international payments. However, the ECB's analysis suggests that many consumers remain unaware of the system or do not make use of its potential benefits.

The ECB's findings draw on the OeNB Euro Survey, which examined remittance patterns and payment choices in six south-eastern European countries: Bulgaria, Romania, Albania, Bosnia and Herzegovina, North Macedonia and Serbia. The analysis highlights the importance of remittances to households in the region and the significant differences in the cost of transferring money through available channels.

Migrant workers across Europe send billions of euros each year to support relatives in their countries of origin. Bulgaria receives almost €3 billion in annual remittances, equivalent to approximately 2.1% of its gross domestic product, while inflows to Albania exceed €2.5 billion and account for around 8.4% of GDP. At household level, 21% of respondents in Albania reported receiving remittances, compared with 17% in Bosnia and Herzegovina, 10% in North Macedonia, 9% in Serbia, 8% in Bulgaria and 4% in Romania.

Despite the scale of these transfers, conventional banking channels remain far from dominant in the countries surveyed. Approximately one-third of remittance recipients receive money in cash through relatives or friends, while another third rely on physical money transfer operators. Banking transfers are more commonly used in Bulgaria, whereas more than half of remittance recipients in Albania use money transfer operators.

The cost difference between these channels can be substantial. Cash-to-cash transfers typically incur fees of between 6% and 12%, while digital transfers through non-bank providers generally cost between 1.5% and 4.5%. Depending on the countries involved, provider and payment method, the difference in fees for the same transfer can exceed 10 percentage points. The ECB estimates that a transfer fee of 5% would represent approximately €140 million annually on Bulgaria's remittance inflows and €130 million on those received by Albania.

SEPA offers an alternative for eligible euro transfers, allowing money to move between participating countries under the same basic framework used for domestic payments. The potential savings are particularly relevant where both sender and recipient hold euro-denominated accounts, as this can also eliminate currency conversion costs. However, access depends on the availability of participating payment service providers and, in most cases, the ownership of a suitable payment account. The ECB therefore recognises that not all consumers can immediately switch to SEPA-based transfers.

The geographical reach of the system has expanded considerably. Bulgaria and Romania have been within its scope for more than 15 years, while Albania and North Macedonia joined in 2024 and Serbia in 2025. Bosnia and Herzegovina formally applied for membership in August 2026. The ECB cautions, however, that inclusion within SEPA's geographical scope does not automatically mean that payment services are fully operational or immediately available in every country.

Public awareness remains a significant obstacle. Fewer than 40% of consumers surveyed had heard of SEPA, regardless of how long their country had been included in its geographical scope. Awareness was higher among individuals with greater incomes, education and financial literacy. Consumers with tertiary education were approximately 17 percentage points more likely to know about SEPA than those with only primary education. The ECB also observed that awareness of crypto-assets was considerably higher, despite fewer than one in ten consumers in the surveyed countries owning them.

The central bank nevertheless cautioned that improving awareness does not necessarily guarantee changes in consumer behaviour. Research cited in its analysis suggests that providing information about deposit insurance can improve public understanding without necessarily changing financial decisions. Even so, the ECB considers that greater knowledge of SEPA and the available payment options could encourage households to move away from expensive transfer services, particularly where the potential savings are significant.

The findings are also relevant to Cyprus, which has made considerable progress in digital payments and instant transfers. According to a Central Bank of Cyprus report published in July 2026, non-cash payment transactions increased by 8% year on year to 174 million in the second half of 2025. Their total value rose by 9% to €148 billion. Card payments accounted for 75% of all non-cash transactions, the highest proportion in the euro area, compared with an average of 57%.

Cyprus has also recorded substantial growth in instant payments following the implementation of the EU Instant Payments Regulation. The share of instant transfers among all SEPA credit transfers increased from less than 1% to almost 32% by volume. By value, instant payments represented approximately 9% of transfers, with an average transaction of €1,500, compared with €5,500 for traditional SEPA credit transfers.

Under the EU framework, banks are required to process instant euro payments around the clock, with funds reaching the recipient within ten seconds. The requirements for receiving instant payments applied earlier, while the obligation to send them became mandatory on 9 October 2025. The regulation also introduced safeguards requiring payment service providers to verify whether the beneficiary's name corresponds with the account's IBAN, helping reduce the risk of misdirected payments and certain forms of payment fraud.

A further development under consideration in Cyprus is an interbank service that would allow customers to transfer money using the recipient's mobile telephone number rather than exchanging IBAN details. The proposed service, which was being considered for introduction in the first quarter of 2027, would use mobile numbers as proxies linked to bank accounts. Its implementation would provide another way to simplify domestic transfers, although it would not replace the wider SEPA framework for cross-border euro payments.

The ECB's latest analysis highlights that the challenge facing European payment integration is no longer limited to expanding the geographical reach or technical capabilities of the system. It also involves ensuring that consumers understand the available services and can access them through their banks or other payment providers. For households receiving remittances, particularly migrant workers supporting relatives abroad, the choice of transfer channel can have a direct impact on the amount ultimately received.

For financial institutions and payment service providers, the findings reinforce the importance of accessible payment services, transparent pricing and consumer awareness. Wider use of SEPA could reduce reliance on costly cash-based intermediaries, improve the efficiency of cross-border payments and help households retain a greater proportion of the money transferred. The ECB's position is that the benefits of European payment integration will remain incomplete unless consumers are both aware of the alternatives and able to use them in practice.

By fLEXI tEAM