The list of complaints is long: the Lithuanian employee of a German electronics wholesaler complains, for example, that his Lithuanian account was not accepted as a wage account despite repeated requests. He only gets his salary transferred to a German account. It was similar for a student from Belgium. In the information letter from the Studentenwerk she had to read that she could only process the standing order for the dormitory via a German account. They should please open one here on site, they said.
However, it is the same the other way around. Even accounts with a German Iban are sometimes not accepted in other EU countries. An example: In March 2021, the then MEP Sven Giegold (Greens) complained in a letter to the EU Commission that the administration of the European Parliament only wanted to transfer the salaries of the parliamentary assistants to accounts with Belgian Iban. Giegold described this process as “particularly embarrassing”. Eventually he affected one of the most important European institutions.
In technical jargon, these cases are referred to briefly and concisely as “Iban discrimination”. Those affected are denied transfers, direct debits or the conclusion of contracts simply because they do not have a domestic account. The consequences are sometimes serious. They have no access to health insurance, no unemployment benefits, cannot pay electricity bills and cannot conclude mobile phone contracts. The only way out is often to open a bank account with a local Iban.
The requirement applies to 36 European countries
This practice has long been illegal in the European Union. It was introduced in 2014 by the European Sepa regulation 260/2012 forbidden. After all, the intention behind the introduction of the Sepa area (Single Euro Payments Area) was to enable fast, secure and cross-border payment transactions in the European Economic Area. For this, too, the national account numbers were replaced by international Ibans (International Bank Account Numbers). Since 2016, banks, merchants and authorities have had to accept these account numbers. The requirement applies to 36 European countries.
But even now, with cashless payments gaining ground, complaints about Iban discrimination continue. A number of well-known financial service providers such as Wise, Revolut and Klarna therefore founded an international initiative called “Accept my Iban” in 2021. It collects consumer complaints and reports them to national authorities and the EU Commission. It is no coincidence that the initiative was created by neobanks and young financial service providers. For them, Iban discrimination is a big problem as they often assign foreign Ibans to their customers. In the case of Wise, they are Belgian account numbers.
According to a current evaluation of the initiative, there have been more than 2,200 complaints since March 2021 home page received. Most problems in Germany affected companies from the financial sector (28 percent), e-commerce (21 percent), telecommunications (21 percent) and the public sector (8 percent). Germany plays a major role in the evaluation. Every second complaint concerned a German Iban that was not accepted abroad. Twelve percent of the complaints were directed against companies based in Germany. Experts estimate the number of unreported cases to be high. By far not all those affected report the cases, especially since many do not know the legal situation.
Many companies blame outdated IT systems
In Germany, consumers can also contact the Center for combating unfair competition contact in Bad Homburg. The Competition Center, as it is commonly known, has collected a total of 680 complaints about Iban discrimination since 2017. According to the association, in Germany, insurers, energy suppliers and building societies are particularly affected. If the head office finds Iban discrimination, it demands a cease-and-desist declaration from the company. If necessary, she even files a complaint with the competent regional courts. So far, she has been successful in 35 out of 36 cases, even against large companies such as the comparison portal Verivox, the real estate group Vonovia and the insurance company Arag. According to the association, the processes have always had an effect. There have been no complaints about the companies since the verdicts.
The causes of Iban discrimination are rather trivial. According to the “Accept my Iban” initiative, most companies blame outdated IT systems. These would have difficulties processing Iban whose format differs from German. Not all Ibans are the same in shape and length. For example, Germans start with the letters “DE” and continue with 20 digits, but in other countries it can also be more or fewer digits or letters can be in the middle of the number rows, for example in the Netherlands. For some merchants, the transfer fails as early as in the input mask, in which the country codes are pre-filled or there are not enough or too many boxes available. In addition, some companies and employees are still simply unaware of the applicable regulations, the competition center reports. Some consumers also reported that transactions with foreign Ibans were not processed for security reasons.
When the companies are confronted with the complaints, the reaction is almost always the same: they firmly deny the allegation of Iban discrimination. In some cases, reference is made to ignorant employees. The student union asserts, for example, that the information letter was “misleading” and “out of date”. “We will update it immediately.”
The “Accept my Iban” initiative has already had initial successes. For example, in France, at the end of 2021, the Directorate-General for Competition, Consumption and Combating Fraud (DGCCRF) and the National Committee for Cashless Payments (CNPS) announced that they would impose fines on anyone who discriminates against a non-French bank account. The penalties can be up to 375,000 euros. Finally, the letter of protest from former MEP Giegold was also successful. The salaries of parliamentary assistants are now also transferred to non-Belgian accounts. The public pressure had paid off in the case.