How a lot of companies are violating EU law and how this affects you
Why IBAN discrimination is important and what you can do about it
Has your foreign IBAN ever been rejected by a company or governmental agency? Was this based on your IBAN's country code?
I am an Austrian citizen with a German bank account. I have encountered this on several occasions while living in Austria and abroad.
I am not alone. About 1.356 people have complained about this issue in 2021 according to the European Forum for Innovative Payments (EFIP).
So what exactly is IBAN discrimination, why is it illegal, and how can you fight it?
What is IBAN Discrimination
The IBAN or International bank account number is a type of bank code associated with your bank account. The purpose of the IBAN is to identify your bank account internationally and send or receive payments.
In every country, IBANs have the same format. The IBAN starts with a country code, followed by numbers — the number of digits can vary. For example, the German IBAN has 22 digits, while the Norwegian one has only 15 digits.
Companies or governmental agencies sometimes refuse non-domestic accounts to make or receive payments. This is called IBAN discrimination.
Why is IBAN Discrimination Illegal
The Single Euro Payments Area (SEPA), was a project by the European Payment Council.
The aim was to allow cashless euro payments across Europe. Even countries outside the Euro area namely Sweden and Romania adopted SEPA.
The legal frameworks were laid out in 2007 and later harmonized under the SEPA Regulation in 2014.
Article 9 of the SEPA Regulation clearly states:
A payer or payee cannot specify the Member State in which the account to be debited or credited is located
This means, your payment should not be rejected based on your IBAN if you have an Italian bank account and want to receive governmental aid in France.
Some companies and government agencies still refuse to process payments from non-domestic accounts.
This can affect anyone. Individuals receiving their salary or paying their bills, as well as companies operating on an international level.
What can you do about this
The Commission is aware of the problem and started discussing it in July 2021.
Member states are encouraged to write SEPA into national law. This can then be enforced with sanctions, fines, and increased supervision. For example, France declared they will start fining anyone who discriminates against a non-French bank account.
These are all slow processes, but here are some steps you can take today.
Know your rights
Talk to the company or governmental agency about SEPA. They are breaking the law, by not accepting your IBAN and might not be aware of it.
Report It
You can report IBAN discrimination through “Accept my IBAN” or at your national authority.
Final thoughts
Democracy is a slow process. Fighting for something that does not work on a governmental level can feel daunting.
I chose a German bank because the “Tomorrow” bank is a sustainable online bank. You can use this affiliate link to give me and yourself a month off. Plus, 3m² of land in South Africa will be renaturated for each of us. I told you this bank cares about sustainability!
Knowing your rights, creating awareness, and fighting for those rights matters. We all create the world we want to live in together.
Want to learn about building global teams and shared experiences? Join my newsletter and improve how can personalize your work culture. Sign up for free!
