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SEPA stands for ‘Single Euro Payment Area’. It’s a financial system that is designed to create efficiency for countries using the currency Euro by providing a unified system in which to perform financial transactions. The SEPA seeks to create a improved system for credit transfers, an improved debit system and a cheaper way for individuals and firms to make transactions within member countries or regions. Implementation of SEPA makes the customers life at ease. Irrespective of the national area customers will be able to perform euro payments and also they need only one bank account in the euro zone.

The SEPA introduces two payment methods intended to replace national methods: the “SCT” credit transfer and the “SDD” direct debit which are based on a “mandate”.

The legal framework for SEPA is defined by a consortium of European banks, the European Payments Council. In parallel, the European Commission has regulated the framework for this migration, by setting ending dates to the national instruments.

A brief background about SEPA

The development of SEPA is being driven by various key stakeholders. The European Commission (EC) is pushing developments forward to enable the establishment of a truly internal European market . SEPA is the vehicle for implementing this vision within the payments business. The development of the New Legal Framework (NLF), which is to be finalized in the coming months, will build the legal foundation for a single payments market.

The NLF is to be implemented in the local laws of the different EU countries. The introduction of the euro was just the first step towards creating the SEPA. The EC initiated further efforts to allow cross-border euro payments to be made under the same conditions as within national borders.

We shall have a look on how to implement this basic functionality in the FSCD system in this blog.

Beginning of Regulatory framework for SEPA

The implementation of SEPA falls within the regulatory framework defined by the European directive on Payment Services (2007/64/EC of 13 November 2007). SEPA aims at creating a single euro payments area (SEPA), a geographical area where each user will be able to make payments in euros under identical conditions. For this purpose, the SEPA introduces two payment methods, intended to replace the national methods of the various Member

  1. European domestic credit transfers in euros, the SCT (SEPA Credit Transfer)
  2. European domestic debit transfers in euros, the SDD (SEPA Direct Debit).

SEPA in FSCD / Contract Accounting

All the rules and messages defining the SEPA standard have been defined by the European Payments Council, (EPC), the decision-making and coordination body in the field of payments, and have been formalized in a set of “Rulebooks” and “Implementation Guidelines”, which do not have legally binding force but which set the frame for the implementation of the SEPA.

The below mentioned basic steps should be done for Implementation of SEPA in SAP FSCD / Contract Accounting system:

1. SEPA Activation for Mandate Management

Following are the activities which are to be done as part of this:

SEPA mandate management has to be activated for the usage with SDD CORE and SDD B2B from FSCD payment processing.  Apart from activating the SEPA Mandate management we need to maintain the SEPA Mandate management modifiable fields.

Below is the path for activating the SEPA Mandate Management and maintain the modifiable fields.

IMG -> Financial Accounting -> Contract Accounts Receivable and Payable -> Business Transactions -> Incoming Payments -> Management of SEPA Mandates -> General Settings.

or in T-code SM30 you can put in the table V_SEPA_CUST

Once SEPA functionality is activated and you can start using the Mandate Screens. You can view the mandate details in SEPA_MANDATE table once the mandates are created / migrated using FSEPA_M1 (Create) , FSEPA_M2 (Change) and FSEPA_M3 (Display)

In the transactions for creating, displaying, and changing mandates, we can select mandates on the initial screen using the following criteria:

  • ID of the mandate
  • Creditor ID of the company code
  • IBAN
  • Customer
  • Paying company code

You can uniquely identify a mandate using the creditor identification number (creditor ID) and the mandate reference (mandate ID).

2. Configuring SEPA DMEE

Creation of new DMEE Payment Format tree for SEPA credit transfer and SEPA direct debit. SEPA_CT and SEPA_DD are the DMEE formats provided by SAP.

It is always better to copy the DMEE formats and create new ones. If there is any custom requirement for any country create a user exit and assign to the field that needs to be changed dynamically.



3. SEPA Payment Medium Format

Define Payment Medium Formats using T-Code FQP3 for FICA. The payment medium format controls how payment orders and debit memo orders to the bank are created.

Following event modules should be configured

T-code FBZP: payment method creation, first in Country and then in Company code


Permitted Currencies may be selected as EURO


Permitted Currencies may be selected as EURO

Once these basic configurations are done you can create SDD and SCT files using FPY1 provided the existing settings and configuration exists for other payment formats. The CAs having SEPA payment method will have respective SEPA xml outputs and only if IBAN is activated in their bank master data and bank configuration in FPP1 / FPP2. The house banks in FI12 also needs to have their IBAN defined in their bank accounts.

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