IBAN Discrimination: Stop Breaking the Law

Today is World Consumer Rights Day. You may remember that we care - a lot - about banning hidden fees in international payments. But one of our other bugbears is IBAN discrimination.

IBAN discrimination happens when your bank, gym, internet provider, tax authority, employer etc refuse to accept your (bank) account because it isn't from the "right" country. They may insist that your IBAN should start with DE (for Germany) when you're trying to set up a new phone contract in Germany, when you have a Wise account that starts with BE (for Belgium). This is illegal and it has been since 2014.

That's why, exactly two years ago today, we founded Accept My IBAN, a platform that enables consumers to log IBAN discrimination complaints regardless of where they are or who they bank with. Friends from all over the industry, like N26, Truelayer, N26 and Bunq have joined us to put an end to the problem. But it's still happening and that's just not good enough.

Read our letter below.

Two years ago today, Accept My IBAN went live. It created an easy way for consumers to log cases of IBAN discrimination, regardless of where in Europe they are based or who they bank with. While it’s been a successful initiative that’s collected nearly 3000 consumer complaints, we shouldn’t have had to launch the platform in the first place.

IBAN discrimination - when an organisation tells you your bank account number needs to be from a certain EU country instead of another - has been illegal since 2014. And yet, we receive new IBAN discrimination complaints from all over Europe every single day. National authorities don’t see this as a big problem because they don’t see any complaints coming in. That’s understandable: it’s a complete minefield for consumers to find out who to complain to in the first place. In some countries, consumers can choose from over 20 authorities, navigating websites that may not be in a language they master.

Today, providers breaking the law get away largely unsanctioned. The only outlier is Italy, fining Vodafone and Wind Tre €800 000 for IBAN discrimination. Unfortunately, they’ve continued discriminating after paying up. Vodafone and Wind Tre have been named 157 times on Accept My IBAN.

This can’t continue. We need authorities to take IBAN discrimination seriously and stop these breaches of the EU Single Market. The consumer harm is obvious: they can’t pay or get paid using the account they have. In order to get their tax rebate, receive medical insurance payouts, pay their taxes, set up a new phone contract or a direct debit with their gym, they are forced to open a local bank account or risk losing money, getting denied a service or getting fined themselves.

The ban on IBAN discrimination is in place to unify the EU Single Market. It’s there to enable consumers to pay and get paid regardless of the country code of their IBAN. In theory, consumers shouldn’t need more than one account to simply pay and get paid in the EU.

Unfortunately, the reality is very different and firms often have to get local licenses, open local offices, invest time, money and effort into getting different IBAN ranges so their customers aren’t shut out or discriminated against. That costs millions of euros every year. Millions that could have been invested in growing companies, creating jobs and making the EU a financial powerhouse. It also hinders innovation, stops providers from being able to offer their services in the best possible way and forces people to open accounts with legacy banks.

IBAN discrimination also occurs against entrepreneurs and businesses trying to operate across borders. Financial service providers, e-commerce marketplaces, and others regularly require businesses to have the same IBAN country code as the country they are based in. This contradicts the spirit and commercial aspirations of the Single Market and forms a barrier to entry and growth for Europe’s burgeoning entrepreneurs. It’s in the economic interests of Member States and EU institutions to allow businesses to operate freely, without IBAN discrimination looming over them.

We’re calling on authorities to take IBAN discrimination seriously. There should be no excuses for outdated software systems, for protectionism to promote local bank accounts or for leniency. Organisations have had nearly a decade to comply with the ban on IBAN discrimination. And while it’s less surprising that the private sector cuts corners, it’s shocking to see the public sector set such a disappointing example. One in six consumer complaints are about the public sector. Government institutions should be better than this.

If we lose trust in national authorities to tackle this issue, it might be time for an EU IBAN to make its entrance, to push behaviour change and compliance…

Accept My IBAN

Wise, N26, Truelayer, Monese, Bunq, Klarna, IAMTN, Estonia E-residency, Sumup, Cledara

Want to read more on consumer protection? Read what Consumers International wrote on digital finance issues here