European fintechs launch initiative against IBAN discrimination

It is actually forbidden for European companies to discriminate against consumers on the basis of a non-local IBAN. Nevertheless, this discrimination does take place. An initiative by various fintechs such as Wise, N26 and Klarna wants to collect the cases.

Anyone with an account in the European Union should be able to make direct debit payments in any of its countries. This is what the EU regulation in force since 2014 stipulates. In reality, however, so-called IBAN discrimination occurs time and again. An initiative by several fintechs aims to change this: The "Accept my IBAN" website can be used to report if a transaction could not take place because the company did not accept the IBAN from another EU country.

The initiative is led by Wise, formerly Transferwise: "Unfortunately, European consumers are mostly unaware that banks, merchants, or even public institutions are not allowed to ban IBANs from another EU country," says Arunan Tharmarajah, Head of Europe at Wise. "Knowing your rights is half the battle. Complaining and reporting these processes is the key to ending IBAN discrimination," he continues.

A long list of European fintechs are taking part in the initiative: Raisin, N26, Revolut, Sumup, Klarna, Fire and Starling Bank.

The reports from consumers, whose data will be anonymized, will be submitted to authorities and the European Commission. It is unclear what will come of this, but it could increase public pressure. Just last year, the German Federal Court of Justice once again confirmed the rights of consumers with regard to the validity of the IBAN, which must be accepted in all European countries.

For banks and payment service providers, this discrimination leads to a loss of customers. If it is known that the IBAN is often not recognized in certain countries, the corresponding providers become unattractive for customers. This is a competitive disadvantage.