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A practical glossary of European payment terms

Short, checked definitions of the words you meet when you invoice, collect and reconcile euro payments. Each entry is one to three sentences, verified against European Payments Council, European Central Bank, EU legal and ISO sources, and links to the page that explains it in depth.

By Daniel Malbašić · Last reviewed

What is this glossary?

This glossary explains the SEPA and euro payment terms a business meets when it sends invoices, collects payments and reconciles its bank account. Each entry gives a plain-English definition in one to three sentences, checked against the European Payments Council (EPC), the European Central Bank (ECB), EU legal texts or ISO standards, and links to the page that covers the topic in depth.

How to use it

Terms are listed alphabetically, grouped by letter. Abbreviations are listed under their short form when that is how people search for them (for example, "IBAN", "SCT Inst"). Where a definition depends on a rulebook or law that changes, we say which version or date we used. Definitions describe common usage, not legal interpretation; for a legal question, read the source text or ask a qualified adviser. Last checked: 5 November 2026. The glossary is written by DIGITAL EUR, an independent project with no link to the ECB or the EPC; see about DIGITAL EUR.

If you are… Start with
Setting up invoices for bank transfers IBAN, Remittance information, RF creditor reference, Verification of Payee
Collecting recurring payments Mandate, Creditor Identifier, SDD Core, SDD B2B, R-transactions
Choosing payment methods Credit transfer, SCT Inst, Card scheme, Interchange fee, Payment initiation service
Reconciling your bank account Reconciliation, camt.053, End-to-End ID, Partial payment, Batch booking

A

Account information service (AIS). An online service that, with the customer's consent, collects data from one or more of their payment accounts held at other providers and presents it in one place. It is one of the two "open banking" services in EU payment law. See euro payments guide.

Account servicing payment service provider (ASPSP). The bank or other provider that holds a customer's payment account. In open banking, it is the provider that third parties connect to.

Account-to-account payment (A2A). A payment that moves money directly from the payer's bank account to the payee's, without a card. In the EU it usually runs as a SEPA credit transfer, often instant.

Acquirer. The payment provider that accepts card payments on behalf of a merchant and pays the proceeds out to the merchant's account. The acquirer charges the merchant service charge.

Allocation. In reconciliation, the decision to apply all or part of a received payment to a specific invoice. A safe allocation never exceeds the invoice's outstanding amount or the payment's remaining amount. See SEPA reconciliation guide.

Audit trail. A record of who did what and when. For reconciliation, it should be append-only: a reversal is a new entry, not an edit of the old one.

B

Batch booking. A single amount on a bank statement that represents several payments, such as a direct debit file or a provider payout. The individual transactions sit underneath in the statement detail, in a camt.054 or in the provider's report.

BIC (Business Identifier Code). A code that identifies a bank or other institution, defined in ISO 9362. Since 1 February 2016, customers paying within the EEA need to give only the IBAN; for SEPA transfers to or from non-EEA SEPA countries, the Bundesbank notes that the BIC must still be provided.

Booking date. The date on which a bank records an entry on the account. It is the date that usually decides in which accounting period a payment falls.

Business day. A day on which the payment service providers involved are open for the business needed to execute a payment. SEPA Credit Transfer deadlines are counted in business days; SCT Inst runs on every calendar day.

C

camt.052. An ISO 20022 intraday account report. It gives a near real-time view of entries, but it is provisional and not a closing statement.

camt.053. The ISO 20022 end-of-day bank-to-customer statement in XML. It reports booked entries with balances and carries the remittance information, references and counterparty details in separate fields, which makes it the preferred source for reconciliation. See SEPA reconciliation guide.

camt.054. An ISO 20022 debit and credit notification. It often supplies the individual transactions behind a batch booking, but contains no balances.

Card scheme. The organisation that sets the rules and runs the network for a card brand, such as Visa or Mastercard. In a four-party scheme, the issuer and acquirer are different providers; in a three-party scheme, one company plays both roles.

Chargeback. The reversal of a card payment through the card issuer when the cardholder disputes it, under the card scheme's rules. The merchant can usually contest it with evidence.

Clearing. The process of transmitting, reconciling and in some cases confirming payment orders before settlement, as defined in the ECB's payments glossary. Clearing may include netting.

Clearing and Settlement Mechanism (CSM). The infrastructure that clears and settles SEPA payments between banks. TIPS, operated by the Eurosystem, is one example for instant payments.

Combined payment. One incoming transfer that pays several invoices. It can be allocated safely only where the evidence, such as listed invoice numbers, supports each part.

Creditor. In a direct debit, the business that collects the money; in a credit transfer, the payee who receives it.

Creditor Identifier (CI). A reference that identifies the business collecting SEPA direct debits. Together with the unique mandate reference, it identifies each mandate, according to the EPC.

Credit transfer. A payment initiated by the payer, who instructs their own provider to move money to the payee's account. Compare with direct debit, which the payee initiates.

Cut-off time. The time of day after which a provider treats a payment order as received on the next business day. It affects when standard transfers and direct debit submissions are processed.

D

Debtor. The party who pays: the payer in a credit transfer, or the account holder debited in a direct debit.

Digital euro. A possible future form of central bank money for retail payments in the euro area. It has not been issued, and its legal framework is still under negotiation. See digital euro and digital euro vs SEPA.

Direct debit. A payment initiated by the payee on the basis of a mandate given by the payer. In SEPA it follows the SDD Core or SDD B2B rulebook.

Dispute. A payer's challenge to a payment. For cards it leads to a chargeback; for SEPA Direct Debit Core it takes the form of a refund request.

E

End-to-End ID. A reference of up to 35 characters that the initiator of a payment assigns and that is passed unchanged to the other side. For a transfer you receive, it belongs to the payer; for a direct debit you collect, it is yours. See SEPA reconciliation guide.

EPC (European Payments Council). The body that develops and manages the SEPA payment scheme rulebooks, including SCT, SCT Inst and SDD, and the Verification of Payee scheme.

EPI (European Payments Initiative). A company set up by European banks and payment providers that runs the Wero wallet. It is authorised as a payment institution in Belgium.

Euro area. The EU countries that use the euro. According to the ECB, the euro is legal tender in 21 of the 27 EU Member States, after Bulgaria adopted it in 2026.

Exception. In reconciliation, a payment that cannot be matched with confidence: partial, combined, duplicate, unreferenced or tied between two invoices. It needs a person's decision.

I

IBAN (International Bank Account Number). The international format for a bank account number, defined in ISO 13616. It starts with a two-letter country code and two check digits, followed by the national account number, and is up to 34 characters long. Try our IBAN format checker.

Instant Payments Regulation (IPR). Regulation (EU) 2024/886, which amended the SEPA Regulation in April 2024. It requires providers to offer instant euro transfers at no higher price than standard ones and to offer Verification of Payee, with deadlines in 2025 for the euro area and from 2027 for non-euro countries.

Interchange fee. The fee the merchant's acquirer pays the card issuer on each card payment. For consumer cards issued and acquired in the EU, Regulation (EU) 2015/751 caps it at 0.2% for debit and 0.3% for credit cards. See euro payment fee calculator.

Interchange++ (IC++). A pricing model in which the provider shows interchange, scheme fees and its own margin as separate amounts. The alternative is a single blended rate.

ISO 11649. The ISO standard for the structured creditor reference, known as the RF reference. See RF creditor reference.

ISO 20022. The international standard for financial messages used by SEPA, including pain (customer to bank), pacs (bank to bank) and camt (cash management) messages.

Issuer. The bank or provider that gives a card to the cardholder and pays the acquirer for the cardholder's purchases.

M

Mandate. The payer's authorisation for a creditor to collect direct debits from their account. In SEPA the creditor stores the mandate, and the payer can cancel it.

Merchant service charge (MSC). The total fee a merchant pays its acquirer for a card payment, including interchange, scheme fees and the acquirer's margin.

MT940. An older SWIFT end-of-day statement format, still widely supported. Payment details sit in a free-text field whose layout varies by bank, which makes reconciliation harder than with camt.053.

O

Open banking. The general name for regulated third-party access to payment accounts, through account information and payment initiation services. In the EU it rests on the revised Payment Services Directive (PSD2).

Overpayment. A payment larger than the invoice's outstanding amount. Allocate up to the outstanding amount and decide separately what to do with the excess.

P

pacs.008. The ISO 20022 message banks use to pass a customer credit transfer to each other.

pain.001. The ISO 20022 message a business uses to send credit transfer instructions to its bank.

pain.008. The ISO 20022 message a creditor uses to submit direct debit collections to its bank.

Partial payment. A payment smaller than the invoice's outstanding amount. Allocate what arrived and leave the remainder open.

Pay by bank. A checkout option where the customer pays by bank transfer started through a payment initiation service, instead of entering card details.

Payment initiation service (PIS). A service that places a payment order at the customer's request on a payment account held at another provider. The provider offering it is a payment initiation service provider (PISP).

Payment service provider (PSP). Any provider of payment services, including banks, payment institutions and electronic money institutions.

Payout. The transfer from a payment provider to the merchant's bank account. It is usually the net of many payments after fees, refunds and disputes.

Pre-notification. The notice a creditor gives a payer before each SEPA direct debit, stating the amount and date. The usual period is 14 calendar days unless the mandate terms agree a shorter one.

PSD2, PSD3 and PSR. PSD2 is Directive (EU) 2015/2366, the current EU payment services law. PSD3 and the Payment Services Regulation (PSR) are its planned successors; the Council adopted its first-reading position on the PSR on 29 October 2026, and the texts are not yet in force.

R

R-transactions. The EPC's name for payments that do not complete normally: rejects, refusals, returns, refunds, reversals and, for credit transfers, recalls. Each carries a reason code.

Recall. A request by the payer's bank to return a credit transfer already executed, for example after a duplicate or fraudulent payment. The payee may accept or decline.

Reconciliation. Checking that your records agree with the bank: every statement line is explained, every receipt is allocated to the right invoice, and balances match. See SEPA reconciliation guide and manual vs automated reconciliation.

Refund (direct debit). The payer's right under SDD Core to recover a collected amount: without reason for eight weeks after the debit, or up to 13 months if it was unauthorised. SDD B2B has no refund right for authorised collections.

Reject. A payment that is stopped before settlement, for example because of an invalid IBAN or format error.

Remittance information. The field that tells the payee what a payment is for: up to 140 characters, either unstructured free text or a structured creditor reference.

Return. A payment sent back after settlement, for example because the account is closed or a direct debit could not be collected.

Reversal. A creditor's correction of a direct debit that should not have been collected, sent after settlement.

RF creditor reference. A structured payment reference under ISO 11649: "RF", two check digits and up to 21 characters. The check digits catch typing errors. Try our reference checker.

S

SCA (strong customer authentication). Authentication using two or more independent elements from knowledge (something only the user knows), possession (something only the user has) and inherence (something the user is). It applies to most online card and account payments in the EEA.

SCT (SEPA Credit Transfer). The EPC scheme for standard euro credit transfers. The payer's bank must ensure the money reaches the payee's bank within one business day of receiving the order.

SCT Inst (SEPA Instant Credit Transfer). The EPC scheme for instant euro credit transfers: funds are on the payee's account in under ten seconds, at any time, on any day. There is no maximum amount at scheme level; banks may set their own limits.

SDD B2B. The SEPA Direct Debit scheme for business payers only. There is no refund right for authorised collections, and the payer's bank must confirm the mandate before debiting.

SDD Core. The SEPA Direct Debit scheme that works for consumers and businesses. Payers have an eight-week no-questions refund right.

SEPA (Single Euro Payments Area). The area in which euro payments follow common rules. Per the EPC's country list (version 8.0, December 2025), its schemes cover 41 countries: 27 EU states, three other EEA states and 11 others including Switzerland and the United Kingdom.

SEPA Payment Account Access (SPAA). An EPC scheme setting rules for "premium" account data and payment initiation services that banks offer to third parties beyond the legal minimum. It is a messaging scheme, not a payment method.

SEPA Regulation. Regulation (EU) No 260/2012, which sets the legal requirements for euro credit transfers and direct debits in the EU, amended in 2024 by the Instant Payments Regulation.

SEPA Request-to-Pay (SRTP). An EPC scheme that lets a payee send a request for payment to a payer. It is a messaging function, not a payment means.

Settlement. The final transfer of funds that discharges the obligation between the parties' providers.

Structured remittance. Remittance information in a machine-readable form, typically an RF creditor reference, instead of free text.

T

T2. The Eurosystem's real-time gross settlement system for large-value payments in central bank money.

TIPS (TARGET Instant Payment Settlement). The Eurosystem's platform for settling instant payments in central bank money around the clock, every day. It is compliant with the SCT Inst scheme.

U

Ultimate creditor / ultimate debtor. Optional ISO 20022 fields naming the party on whose behalf a payment is received or made, when that differs from the account holder.

Unique mandate reference (UMR). The creditor's reference for one direct debit mandate. It must be quoted in every collection under that mandate.

Unstructured remittance. Free-text remittance information, such as "Invoice 2026-0101 October". Useful, but inconsistent for automated matching.

V

Value date. The reference time a provider uses to calculate interest on funds debited from or credited to an account.

Verification of Payee (VoP). A check, before a credit transfer is authorised, of whether the payee's name matches the IBAN. Results are match, close match, no match or not possible. Euro-area banks must offer it since 9 October 2025.

Virtual IBAN. An IBAN that routes incoming payments to an underlying account while identifying a particular customer or purpose. Payment providers use it to tell payers apart automatically. See Stripe vs SEPA bank transfer.

W

Wallet. An app that stores payment credentials. Card-based wallets pass a tokenised card payment; account-to-account wallets move money between bank accounts.

Wero. A digital wallet from the European Payments Initiative, based on the EPC's instant payment scheme. It started with person-to-person payments in 2024 and is expanding to purchases country by country.

Why do these terms matter for a business?

Most payment problems in a small finance team come from two places: data that does not reach you, and words that mean different things to different people. "Refund" in a direct debit is a scheme right of the payer; "refund" in a shop is a new payment you make. "Return" and "recall" sound alike but come from different sides. "Reconciled" in accounting software can mean the bank line is recorded, not that it was allocated to the right invoice. Shared, precise terms make your procedures, your invoice wording and your conversations with banks and providers shorter.

Which terms are most often confused?

Pair The difference
Credit transfer vs direct debit Payer starts a credit transfer; payee starts a direct debit
Refund vs return A refund is requested by the payer under SDD Core; a return is sent back by a bank because the payment could not be completed
Recall vs reversal A recall comes from the payer's bank for a credit transfer; a reversal comes from the creditor for a direct debit
Booking date vs value date Booking date records the entry; value date drives interest
Remittance information vs End-to-End ID Remittance is written for the payee; the End-to-End ID belongs to whoever started the payment
SEPA vs euro area SEPA has 41 countries; the euro area has 21
SCT Inst vs TIPS SCT Inst is the scheme; TIPS is one settlement platform for it

Frequently asked questions

What are the main SEPA payment types?

Three EPC payment schemes: SEPA Credit Transfer, SEPA Instant Credit Transfer and SEPA Direct Debit (Core and B2B). The EPC also runs non-payment schemes such as Verification of Payee, Request-to-Pay and Payment Account Access.

Is SEPA the same as the euro area?

No. SEPA covers 41 countries for euro payments, including non-euro EU states, Switzerland and the United Kingdom. The euro area is the 21 EU states that use the euro as currency.

Do I need a BIC for a SEPA payment?

Within the EEA, no: since 1 February 2016 the IBAN is enough. For SEPA transfers involving a non-EEA SEPA country, such as Switzerland or the United Kingdom, the BIC is still required in addition to the IBAN.

What is the difference between camt.053 and MT940?

Both are end-of-day statements. camt.053 is the ISO 20022 XML format with separate fields for references and counterparties; MT940 is an older SWIFT format with payment details in one free-text field.

Where can I learn how these terms fit together in practice?

Read our euro payments guide for the payment methods and our SEPA reconciliation guide for matching payments to invoices. Our reconciliation software applies the same terms; it is pre-launch, with a free in-browser demo.

Sources