What is meant SEPA indirect and direct participants?

In the context of SEPA (Single Euro Payments Area), there are two types of participants: direct participants and indirect participants.

1. Direct Participants: These are financial institutions that have a direct membership with the SEPA payment schemes. They are typically banks or payment service providers that have joined and are directly connected to the SEPA payment infrastructure. Direct participants have their own unique Bank Identifier Code (BIC) and are able to send and receive SEPA payments directly through the clearing and settlement systems. They can offer SEPA payment services to their customers, such as credit transfers and direct debits.

2. Indirect Participants: These are financial institutions or payment service providers that do not have a direct membership with the SEPA payment schemes. Instead, they rely on the services of direct participants to access the SEPA payment infrastructure. Indirect participants act as intermediaries, using the services of direct participants to process SEPA payments on behalf of their customers. They do not have their own BIC and cannot directly access the clearing and settlement systems. Instead, they rely on the connectivity and infrastructure of direct participants to facilitate SEPA transactions.

Indirect participants typically enter into agreements with direct participants to access SEPA payment services. They may use various methods to connect to the direct participants, such as correspondent banking relationships or through payment service providers that act as aggregators.

Both direct and indirect participants play important roles in facilitating SEPA payments, allowing individuals, businesses, and organizations to make and receive cross-border euro-denominated payments within the SEPA region.