Can’t pay via a bank account located in another EU country? For “citizens of Europe” it can be “very uncomfortable”.
“IBAN discrimination” occurs “when a person cannot make or receive a SEPA credit transfer or pay via a SEPA direct debit from their bank account located in another Member State”, defines the IBAN website.
Basically, it happens in cases where a company or institution refuses to accept a SEPA transfer or payment because the IBAN is from an EU/EEA country different from the one in which the bank or company is based, explains .
In other words, if you are paying for a foreign product, it is possible that the company will require you to have a bank account with a local (and not international) bank.
On the ““ platform, mainly in France and Spain, the reported cases are many: between February 2021 and September 2023, there were almost 3500.
The platform guarantees that this situation is “illegal”, and the EU website also encourages reporting cases like these.
“IBAN discrimination can be very uncomfortable for consumers, as it can force you to open multiple bank accounts when you live in different EU Member States or prevent you from using new banking services offered by Fintechs,” he told Euronews Anna MartinDirector of Financial Services at the European Consumer Organization (BEUC).
This discrimination based on the location of the bank account has thus led to an increase in Virtual IBANwhich, according to the European Banking Authority (EBA), present several risks related to money laundering, consumer and depositor protection, and even passport-related risks.
“Virtual IBANs cannot be the solution for IBAN discrimination, as they make fraud prevention and resolution difficult and create confusion for consumers about their legal protections, such as refund rights in the event of fraud or protection of their deposit in the event of bankruptcy,” warns Martin.
Fintechs assure that the solution lies in monitoring: “The European Fintech Association (EFA) believes that stronger and more uniform sanctions across all Member States, along with proactive monitoring and enforcement by regulators, are essential to ensure compliance with the SEPA regulation”.
But, for EFA, the real solution to the problem would be the creation of a single IBAN for the entire European Union.
This measure, guarantees the association, would further benefit the single market idea European. The EU guarantees, however, that the effectiveness of its security measures in this field depends on the decisions and internal monitoring of each Member State.
