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Europe’s IBAN problems appear to have not been helped by awareness campaigns, as the Central Bank of Ireland (CBI) calls for assurance from the financial services industry that they are compliant with the rules.
IBAN discrimination occurs when an employer or company, such as a utility company, refuses to accept a SEPA IBAN for euro payments or direct debits, for example, if the customer’s account is with a provider based in another member state from where the transaction occurs.
Although the Single European Payments Area (SEPA) initiative was supposed to prohibit this, fintechs such as Wise and Revolut have long warned that it is still a headache for consumers.
As incidents of IBAN discrimination are continuing to be an issue across Europe, including Ireland, the CBI has said that it has written to regulated entities in the country, and a range of business and professional representative bodies, to remind firms of their obligations under SEPA.
Members of the SEPA area include all 27 members of the EU; the UK; Iceland; Liechtenstein; Monaco; Norway; Switzerland; Andorra; San Marino; and Vatican City.
Providers and facilitators of SEPA credit transfer and direct debit services must be aware of their obligations under SEPA, warned William Molloy, financial operations director at the CBI. “These obligations apply to all organisations including regulated financial services firms, businesses and state organisations.”
“Consumers should be able to choose their payment service provider free from concerns about encountering problems when using their legitimate payment account details,” he added, noting that the SEPA regulations create a single market for consumers which supports choice and facilitates innovation in payments.
Firms have been advised by the CBI to take any actions required to achieve full compliance with the SEPA regulations, thereby preventing cases of IBAN discrimination from occurring at the outset.
“Vigilance in ensuring full compliance with these obligations is especially important in the context of the pending exits of Ulster Bank Ireland DAC and KBC Bank Ireland plc from the Irish retail-banking sector,” cautioned Molloy.
As a result of these exits, a large number of customers will be required to relocate their payment accounts to another PSP, he pointed out. “It is important that those customers who choose to use a PSP with a non-Irish IBAN are supported in doing so.”
Last year, fintechs including Wise, Starling, Klarna and Revolut launched the Accept My IBAN campaign. This encouraged consumers to file a complaint to regulators regarding IBAN discrimination, while also raising awareness of consumer rights under SEPA.
According to the campaign’s website, it has so far had some success in causing headwinds. For example, in France, the General Directorate for Competition, Consumption and Fraud Control (DGCCRF) and the National Committee for Cashless Payments (CNPS) declared in December 2021 that they will start fining anyone who discriminates against a non-French bank account.
