SEPA 2.0: The evolution of European payments

European payments are facing a major change. With SEPA 2.0, the comprehensive reform of the Single Euro Payments Area (SEPA), new standards will come into force in 2025. These are designed to make payments faster, safer and more efficient. This reform is not a sudden revolution, but a necessary evolution that builds on existing structures and adapts them to the requirements of the digital economy. But what does this mean in concrete terms for banks, companies and, in particular, finance departments, such as those in insurance companies? This blog post highlights the most important changes and their implications and offers practical recommendations for successfully mastering the transition.

The pillars of SEPA 2.0

The SEPA area comprises 41 countries, including the 27 EU member states, the EEA countries Iceland, Liechtenstein and Norway, Switzerland, the United Kingdom and smaller states such as Andorra and Monaco. The reform is based on several parallel developments that are jointly modernising payment transactions.

1. Instant Payment Regulation: Real time becomes standard

The Instant Payment Regulation (EU 2024/886), which came into force on 8 April 2024, forms the core of SEPA 2.0: Since 9 January 2025, all payment service providers in the euro area must be able to receive SEPA real-time transfers. From 9 October 2025, they will also be required to actively send them.

The most important features:

• Cost parity: Instant payments must not be more expensive than traditional SEPA transfers. This has already led to an increase in usage: Deutsche Bank reported a 27 percent increase in the volume of real-time payments in January 2025.
• No amount limit: From 5 October 2025, the previous limit of €100,000 per transaction will be abolished. This will also make instant payments attractive for B2B and treasury payments.
• 24/7 availability: Payments must be processed at all times, including weekends and public holidays. This poses new challenges for banks in terms of liquidity management, as traditional clearing cycles are no longer applicable.
• Cross-channel: Real-time transfers must be available across all channels, from online banking to EBICS.

2. Verification of Payee: Security through IBAN name check

From 9 October 2025, banks must check whether the payee name matches the IBAN provided before each SEPA transfer. The Verification of Payee (VoP) process delivers results such as ‘Match’, ‘Close Match’, ‘No Match’ or ‘No Result’ within a few seconds. Corporate customers can decide whether to use the check (opt-in) or deactivate it (opt-out), which is relevant for mass payments via EBICS.

3. New data formats: ISO 20022 Version 2019

Since 17 March 2024, all SEPA payments have been based on ISO 20022 Version 2019, after the migration originally planned for November 2023 was postponed due to operational challenges. This change affects all SEPA payment schemes, including SEPA Credit Transfer, SEPA Instant Credit Transfer, SEPA Direct Debit Core and SEPA Direct Debit Business-to-Business.

These formats offer enhanced functionalities, such as support for the Legal Entity Identifier (LEI) and structured address data. Businesses and banks must adapt their payment systems and ERP software to support these formats.

4. Structured addresses: precision instead of free text

From 23 November 2025, address data in SEPA payments must be transmitted in a structured format, with free text fields replaced by clearly defined fields such as street, house number, postcode, town and ISO country code. Until 22 November 2026, a ‘hybrid postal address’ combining free text with mandatory fields will be permitted. After that, fully structured addresses will be mandatory.

Impact on banks: A technical tour de force

The transition to SEPA 2.0 presents banks with significant challenges that go far beyond normal IT projects.

Technical challenges

• Real-time processing: Payments must be processed in less than ten seconds, which requires high-performance systems and in-memory databases. Traditional batch processes are obsolete.
• 24/7 operation: Continuous availability requires hot-swap clusters, live schema migrations and zero-downtime deployments. Weekend maintenance windows are a thing of the past.
• VoP integration: IBAN name checking requires fast, EU-wide database queries and fuzzy matching engines to tolerate typos without generating false positives.

Liquidity management revolutionised

Automated liquidity management is required for real-time settlement without net batch advantage. Banks must implement predictive net funding algorithms or intraday market funding APIs. The challenge here is that a liquidity buffer of 10 million euros used to be sufficient, whereas today 110 million euros may be required if outflows occur before inflows.

Compliance and risk management

Daily rescreening of customers against sanctions lists, combined with real-time AML checks, places high demands on the performance of fraud detection systems. At the same time, banks must provide detailed reports on fees, rejection rates and availability times to supervisory authorities.

Market readiness among banks

Many banks have begun the transition, but smaller institutions are struggling to meet the deadlines. According to a study, 70 banks missed the first deadline in January 2025, underscoring the urgency. While around 60 percent of SEPA bank codes already support instant payments, VoP readiness is proving particularly critical, as the final specifications were published late.

Impact on corporate customers: adaptation and opportunities

SEPA 2.0 presents both challenges and opportunities for companies, especially CFOs and treasurers, particularly in terms of liquidity management and process efficiency.

Technical adjustments for companies

• ERP and payment systems: Companies must convert their systems to ISO 20022 version 2019 and structured addresses. Missing or incorrect address data may lead to payment failures from November 2025. Early data cleansing is essential.
• EBICS adjustments: New order types such as CTV (credit transfer with VoP) and CVV (real-time credit transfer with VoP) require changes to the EBICS setup. Companies should clarify with their bank whether opting in or out of VoP makes sense.
• Software updates: Payment transaction software must support the new formats. Many providers are under time pressure to deliver updates.

Liquidity management and strategic advantages

Instant payments make it possible to process payments at any time, even on weekends or at 11:59 p.m. on 31 December. This has far-reaching implications:

• Improved liquidity planning: Real-time credit notes reduce uncertainty in cash balances. Companies can minimise safety buffers and control short-term payments more precisely.
• B2B and B2C: In the B2B sector, supply chains can be optimised through immediate payments, for example by shortening payment terms with cash discount incentives. In the B2C sector, immediate refunds increase customer satisfaction, for example in the case of insurance refunds or e-commerce returns.
• Annual financial statements: Payments at the end of the year are posted immediately, which increases the accuracy of financial statements but requires automated processes.
• Standing orders and scheduled payments: Not yet available everywhere

The Instant Payment Regulation primarily refers to one-off payments. However, standing orders and scheduled payments can also be configured as instant payments, provided that the bank supports this. However, as their systems are primarily designed for traditional SEPA transfers, many banks do not yet offer this option as standard. Corporate customers should therefore check whether their bank allows instant standing orders or whether scheduled payments can be triggered manually as instant payments.

Particularly relevant for insurance companies

Instant payments are particularly relevant for insurance companies. Immediate claims settlements – for example, in the event of flight delays or emergencies – dramatically increase customer satisfaction. Incoming payments at the end of the year must be processed in real time to meet regulatory requirements. This requires 24/7-capable systems and possibly automated workflows for accounting.

Market readiness: a mixed picture

Preparations for SEPA 2.0 are uneven. Large banks have already launched extensive programmes, but smaller institutions are struggling with the complexity. According to a study, only 17.8 percent of transfers were processed as instant payments in the first quarter of 2024, indicating that there is considerable ground to make up.

Among corporate customers, large companies are better prepared, while small and medium-sized enterprises often underestimate the effort required for the changeover. Software providers are under pressure because the final EBICS specifications for VoP were published late.

Recommendations

The deadlines for SEPA 2.0 are tight, and the changeover requires proactive action.

For banks

• Modernise systems: Real-time core banking systems and VoP gateways, ideally as a cloud service, should be implemented.
• Adapt liquidity management: Algorithms for intraday liquidity management and automated transfers to TIPS/RT1 should be developed.
• Inform customers: Communication about new requirements should be intensified and training courses offered for corporate customers.
• Use test phases: The EDS test phase should be used from June 2025 onwards to validate VoP solutions.

For corporate customers

• Clean up master data: Address and recipient data should be checked and structured, ideally using AI-supported tools.
• Update systems: Ensure that ERP and payment transaction software support the new ISO 20022 formats.
• Contact banks: Clarify whether instant payments are available for standing orders and how VoP options can be used.
• Adapt processes: Set up workflows for 24/7 payments, especially for critical times such as the end of the year.
• Train employees: Teams should be made aware of real-time payments and fraud risks, such as CEO fraud.

How adesso supports banks with SEPA 2.0 in payment transactions

SEPA 2.0 is not just a technical update, it affects the core of banking: payment transactions. This is exactly where adesso comes in. As a digitalisation partner with many years of experience in the financial sector, we support banks not only in implementing SEPA 2.0, but also in using it as a strategic opportunity.

Our teams support institutions along the entire payment value chain – from analysing existing payment processes to productive implementation in the systems. We have in-depth regulatory knowledge and a deep understanding of the operational processes involved in mass payments.

We develop high-performance backend solutions for various areas of application, such as connecting VoP gateways, migrating to the new ISO 20022 formats, and real-time processing in core banking systems. These solutions are characterised by high stability even under full load. In collaboration with core banking partners, we develop architectures that are available around the clock, guarantee uninterrupted use and can be flexibly adapted.

With targeted GAP analyses, we identify where there is a need for regulatory or procedural improvements – and how these can be efficiently addressed. In testing, we rely on automated procedures that ensure robust transitions. This is particularly important in payment transactions, where errors can have costly consequences.

To implement the new requirements both technically and organisationally, we offer training courses aimed at IT, specialist departments and customer service, with a strong practical focus. The focus is on understanding processes in real-time payment transactions, identifying risks and exploiting opportunities.

In short, adesso combines technology, expertise and implementation power to enable banks not only to implement SEPA 2.0, but also to succeed in tomorrow's payment business.

Conclusion: A new era is dawning

SEPA 2.0 is more than just a regulatory requirement: it offers the opportunity to make European payment transactions fit for the future.

For banks, this means investing in technology and processes, but also developing innovative services such as request-to-pay and embedded payments. Companies can benefit from faster payment flows, more precise liquidity management and higher customer satisfaction. To do so, however, they must adapt their systems and processes.

Time is pressing: With deadlines in October and November 2025, banks and companies must act now to avoid payment disruptions or competitive disadvantages. Insurance companies in particular have the opportunity to distinguish themselves through immediate claims settlement and accurate year-end reporting. Those who approach the transition strategically can use SEPA 2.0 not only as a challenge, but also as a springboard for modern and efficient payment transactions.