SEPA, IBAN and BIC
SEPA, single euro payments area
With the establishment of the single euro payments area SEPA, payment in euro can be made and received between the European countries under the same terms and conditions as within each country. Along with SEPA, the SEPA direct debit payment was also introduced. It is essentially different from the earlier Finnish direct debit system. In SEPA direct debiting, the customer issues an authorisation direct to the invoicing party, instead of the bank.
A SEPA account transfer requires that the payment details include the recipients banking account number in IBAN form and the recipient bank is recognisable on the basis of its BIC.
IBAN account number
An international account number. The abbreviation comes from the words International Bank Account Number. Finnish IBAN numbers start with the country code FI and always contain 18 characters.
A code identifying a specific bank, used together with the IBAN account number. The abbreviation comes from the words Bank Identification Code. The BIC code is not necessary in domestic payments.
Payment on a wrong account
Sometimes a transfer ends in a wrong account because a mistake made by the payer when entering the details. In that case, the payer noticing this can contact their own bank. The payer’s bank asks the recipient’s bank to clarify the situation. If the recipient refuses to return the payment made to them as a result of a mistake, the recipient’s bank has the right to give the recipient’s name and address to the payer’s bank which, in turn, transmits them to the payer. After this, the payer can personally demand the return of the payment from the recipient. In extreme cases, the payer can file a lawsuit against the recipient and request the return of the paid sum in terms of the restitution of an unfounded gain. Not returning the money may, under certain circumstances, also constitute a punishable act. The bank cannot cancel the payment or take them money from the other party’s account to return them to the payer, even if the payment had quite obviously gone to a wrong account.
Cheques are nowadays rarely used in Finland. It is possible to convert a cheque into money by cashing it or giving the bank an assignment to collect it. In the cashing process, the bank pays the customer the sum indicated by the cheque already before checking with the bank of the person who has written the cheque whether it is covered by the corresponding funds. In this case, the customer takes the risk of the bank reclaiming the sum paid, should the cheque prove to be uncovered. Giving the bank an assignment to collect means that the bank will first collect the sum of money written on the cheque from the bank of the person who wrote it and will pay the customer only after receiving the money. In a sense, this is a more secure way that the cover of the cheque has been verified at the point of time when the customer receives the money. Cashing a cheque calls for an assignment given to the bank. It is advisable that the customer always reads the terms and conditions of the assignment quoted in the respective form.