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 takes place. An initiative of various fintechs like Wise, N26 and Klarna wants to collect the cases.

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

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 transactions is key to ending IBAN discrimination," he continues.

Joining the initiative are a long list of European fintechs: Raisin, N26, Revolut, Sumup, Klarna, Fire and Starling Bank.

The reports from consumers, whose data will be anonymised, will be submitted to authorities and the European Commission. What follows from this is unclear, but it could increase public pressure. Just last year, the German Federal Court of Justice also reaffirmed the rights of consumers in the validity of the IBAN, which must be accepted in all European countries.

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