The Fight Against IBAN Discrimination

Date Published: 03 Sep 2021
Last Updated: 12 Sep 2022

Originally posted on Finextra, 02.09.21;

IBAN discrimination, the act of an EU bank or company refusing to accept or make a payment to an International Bank Account Number (IBAN) because it is not from the same country of origin in which the bank or company is based, is illegal. It has been illegal since 2014 and yet the practice continues to effect thousands of businesses and private individuals across the EU. 

Multiple scenarios involving IBAN discrimination exist but at Monneo, there are two in particular that are affecting our clients and must be resolved as a matter of urgency; post-Brexit discrimination against GB IBANS from EU banks and discrimination among banks within the EU. 

Post-Brexit discrimination against GB IBANS from EU banks

Britain’s decision to leave the European Union in 2016 may not have been popular on the continent but regardless, the country is still a part of the Single Euro Payments Area (SEPA). 

This is crucial because EU organisations refusing to accept payments from an IBAN of a SEPA member do so in violation of Article 9 of the SEPA Regulation. The regulation states that an organisation is breaking the law if it refuses to accept, make, or process payments to or from an account with an IBAN in the EU.

From complaints garnered through the Accept My IBAN reporting website and those addressed to Monneo directly, it is clear that some European banks and organisations are contravening Article 9 and refusing to accept IBANs with the GB prefix. The result is EU online merchants are unable to accept settlements from EU acquirers to a British IBAN because some EU banks refuse to transact to GB IBANs.

Despite pressure from the European Commission, it appears many EU organisations are choosing not to abide by this EU law. Others, in the process of updating their legacy systems which make the use of non-national IBANs difficult, are doing little to address the issue. 

Discrimination among banks within the EU 

The second aspect of IBAN discrimination is when it occurs between EU member states. 

There is a growing body of evidence that banks and organizations in EU are only accepting transactions to/from IBANs from certain member states whilst other members states are on a “not acceptable” list.  

By discriminating against any EU country, banks are inadvertently creating a situation which harms EU citizens and businesses, and paralyses innovation and competition in cross-border payments.

It is past the time for organizations and banks across the EU to understand that this discrimination should not happen. It is against the regulations and should not occur anywhere within the Single Euro Payments Area.

One of the EU’s founding principles is the free movement of citizens. This is a principle that cannot be truly extended unless free movement of funds, with no barriers, is also extended. 

IBAN discrimination by service in Europe in the SEPA region
IBAN discrimination by country
IBAN discrimination by service in Europe in the SEPA region
IBAN Discrimination broken down by service

Ending IBAN discrimination

First and foremost, every nation state that is a member of SEPA needs to understand that IBAN discrimination is illegal and end the practice where it is knowingly taking place. 

However, it is often the case that mistakes and technical conversion problems are involved where a foreign IBAN has been rejected and the situation can be remedied. 

Those who believe they have been a victim of IBAN discrimination should first contact the counterparty or bank responsible, describe the details of the incident and attach a notice that IBAN discrimination is illegal under Regulation No. 260/2012 of the EU.

Should a bank continue to reject your IBAN, the next step is to contact your country’s relevant authority and report them. 

Alternatively, you can also register your case on the Accept my IBAN website, which is supported by a coalition of European companies, including Monneo. Your case will be forwarded to the European Commission and any relevant authorities, saving you from having to deal with the disputed payments yourself.

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