I am currently reading stellar documentation and I wondered about this part:

Deposits and withdrawals should be processed through local domestic payment rails (ACH, SEPA, SPEI, etc.), not via wire transfer

I thought that SEPA transfers were one form of wire transfer. But here it sounds as if they are not. Can somebody please explain what the difference is?

2 Answers 2


The term “wire transfer” generally refers to any electronic money transfer mechanism. That includes mechanisms such as SEPA. But in this context, it primarily refers to SWIFT. SWIFT works by partnering banks exchanging payment orders, until the payment reaches the recipient's bank. This is somewhat like packet routing in the internet.

While SWIFT is the standard for international payments, it is subject to various criticism. Fees are unpredictable and high, since each intermediary bank wants to be compensated. The resulting transfers are slow. In the past, the SWIFT architecture has enabled government interference with foreign transactions, such as US surveillance and blocking of intra-EU transfers, or to enforce sanctions on other countries.

We thus see various alternatives to address such shortcomings.

  • Within the EU, SEPA has displaced SWIFT almost entirely but is very comparable for users. While SEPA is not necessarily zero-fee, the fees are often negligible and always predictable. Speed depends on the SEPA variant, and varies from seconds to two days.
  • Internationally, private companies like Paypal and Transferwise offer transfers with near real-time speed and somewhat cheaper prices than SWIFT.
  • In the crypto space, lots of solutions have been proposed. Bitcoin is largely censorship-resistant, but cannot offer real-time speeds and is very expensive (both in direct fees and externalities). Ripple is designed more like a SWIFT replacement, but suffers from its quasi-centralized architecture.
  • The first paragraph of this is a great answer. The second paragraph is a rant against SWIFT which isn't relevant to the question that has been asked. The second and third bullet points are also off-topic.
    – thelem
    Mar 6, 2021 at 14:31
  • 1
    @thelem OP is asking his question in the context of the Stellar documentation. Stellar is – very broadly – infrastructure for a Transferwise-like mechanism built on blockchain technology. The referenced documentation mentions that wire transfers but not SEPA are undesirable. I thus provide some background context about why SWIFT might be considered undesirable, and briefly touch on competitors from various directions. The only part where I'm ranting/editorializing is in mentioning Bitcoin's externalities.
    – amon
    Mar 7, 2021 at 9:09
  • the second paragraph is not a rant against swift - it's completely accurate and correct. Further, as amon mentions, the question is indeed about Stellar.
    – Fattie
    Mar 7, 2021 at 14:46

SEPA means "Single Euro Payments Area", and is a direct account-to-account transfer for Euros - exclusively.
Although technically banks would be allowed to charge a fee, in praxis there is no fee charged, except for EU countries that use other currencies (where it is typically conveniently hidden in the exchange ratio).

SEPA Transfer - contrary to wire transfers - take usually one business day (wire transfers typically are same-day).

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