Neobanks: a platform for reporting IBAN discrimination

Many customers of foreign-based neobanks are being refused payments or direct debits because of the direct debit status of their account. This illegal practice is now being denounced by several European fintechs, who have created a platform to report IBAN discrimination.

A reporting platform set up by several fintechs

While IBANs for accounts domiciled in France begin with the letters FR, those for neobanks domiciled in other European countries, such as Wise or Monese, begin with different letters corresponding to the countries in which they are established.

For a number of companies and retailers, this difference is a reason for refusal for various reasons, set out at the end of 2019 in a report by the DGCCRF and the European Consumer Centre (ECC).

Foreign IBANs are sometimes refused for simple technical reasons, such as when the company's IT system does not allow them to be registered, or when direct debit forms are pre-filled with a French IBAN.

It also happens that a French bank domiciliation is required in the company's general terms and conditions of sale, or that European regulations are simply ignored.

To remedy this IBAN discrimination, several European fintechs have set up a platform for their customers to report refusals of foreign IBANs.

IBAN discrimination, an illegal practice

As the Direction Générale de la Concurrence, de la Consommation et de la Répression des Fraudes (DGCCRF) reminds us, European consumers have the right to open an account with the bank of their choice, even if it is domiciled in another EU member country.

Since August 5, 2014 and the introduction of the Single Euro Payments Area (or SEPA), transfers and direct debits between accounts located in two different countries in the European Union must be made as easily, as quickly and at the same price as national transfers and direct debits.

Yet many employers, retailers and businesses refuse to pay salaries, accept payments or debit invoices from accounts domiciled in another European country.

This practice has been considered illegal since the entry into force of the European law of February 1, 2016 (article 9 of European directive n°260/2012).