Banks Europe Fintech Trending

Wise: The Public and Private Sector Needs to be Held to Account Over IBAN Discrimination

IBAN discrimination is a major issue across a wide range of industries, and many may not realise they are affected by it. Despite being illegal under EU law since 2014, it is still commonplace.

One person who is determined to fight IBAN discrimination is Arunan Tharmarajah, the Head of Europe at Wise (formerly TransferWise).  Wise is a global technology company that’s building the best way to move money around the world. Prior to joining Wise, Arunan worked as an Associate Director in the Barclays Global Transaction Banking team, focusing on correspondent banks in the Americas. He has also worked in a variety of Cash Management roles covering both banks and non-bank corporates.

To help fight against IBAN discrimination, Wise, in collaboration with other financial institutions such as Revolut and N26, have launched the Accept My IBAN initiative, to help raise awareness of the issue and hold both public and private sector businesses to account.

Arunan Tharmarajah, Head of Europe, Wise

What is IBAN discrimination?

An IBAN, or international bank account number, is an international numbering system which is standard in Europe to identify a bank account. Each customer will have a number that is unique to their account and will start with a certain country code (e.g. FR for France, DE for Germany). According to European law, any IBAN issued in an EU Member State needs to be accepted in all Member States. However, this isn’t always the case: IBAN discrimination – when a company, bank, or institution insists you need a local IBAN to pay – is still happening. And it happens often.

Companies, such as gyms or health insurance providers, may discriminate for a variety of reasons. Some don’t know the law, or their systems predate the introduction of IBANs, but generally, it’s unclear why they do it. For many businesses, taking payments is just one small part of what they do, and so they often don’t focus a lot of their efforts on updating this technology.

This means that their infrastructure serves ‘local’ customers better, and isn’t able to deal with details from another country effectively. For unknown reasons, the authorities rarely sanction the IBAN rulebreakers, so there isn’t much incentive for companies to change their policies. These sanctions are imposed on a local level, not an EU-level: and so the EU can only warn Member States about incidents that have taken place, which rarely fosters permanent change. The lack of awareness, communication, and enforcement around this issue means we now need to create a strong sanction system to prevent this from happening.

Are there any consequences to IBAN discrimination?

 Put simply, IBAN discrimination puts unnecessary pressure on consumers to have local bank details. This limits customers from being able to access certain services: for instance, we’ve seen someone in Ireland whose health insurance provider refused to accept his German IBAN, leading to a logistical nightmare for paying for healthcare. When companies’ [illegal] policies restrict access to essential services or paying invoices, then this causes wide-ranging consequences, for consumers, such as not being able to access COVID payments or even get paid at all. This also shows that payments technology has not innovated at a fast enough pace to comply with legislation, and more accountability is needed to force companies to keep up. It also shows how important it is to incentivise local governments to fine rulebreakers.

But consumer awareness of the issue isn’t enough: customers have been in situations where they have told a provider about the legislation and said provider accepts the foreign IBAN as a ‘one-off’, leaving other customers to still be told they need a local bank account. This complicates the situation further; as those who don’t, or aren’t able to, complain continue to face IBAN discrimination. So, it’s important that any solution is two-fold: increasing awareness and updating legislation.

Is there something that could help put a stop to this?

It‘s clear that the current legislation is not applied thoroughly or consistently, especially in terms of enforcement and sanctioning. Any update in legislation needs to be paired with a push to empower consumers to complain. The first step is to make people aware of their right to have their EU IBAN accepted in whichever Member State they use it, and the second is to prove to regulatory bodies that the legislation needs to be enforced more stringently.

One thing’s for certain: authorities need to know the scale of the problem. The Accept My IBAN initiative helps consumers report instances of IBAN discrimination; the first week of the launch alone saw hundreds of complaints submitted. These will then be passed on to the relevant regulators, and ultimately to the European Commission, to truly understand the scale of the problem. Wise and its partners are committed to raising awareness of the issue in the process so that customers know their rights and can tell their banks, gyms, phone providers and even tax authorities about this.

Removing payment friction is no longer a nice “bonus” to offer to consumers – it is essential. With the pandemic, more people are working remotely from different countries, are helping families back home financially, or have opened a digital-only account with a provider that issues non-local IBANs. IBAN discrimination is a roadblock that burdens consumers, and stunts business activities by adding more admin than necessary.

Companies and institutions need to update their practices to stop engaging in this, and legislation needs to be enforced. Without that, international banking can’t truly innovate at the pace that is needed.


  • Polly is a journalist, content creator and general opinion holder from North Wales. She has written for a number of publications, usually hovering around the topics of fintech, tech, lifestyle and body positivity.

Related posts

OpenView and Paddle Identify 5 Key Factors for SaaS Growth Amid Economic Turbulence

Francis Bignell

Just 13 Percent Female Directorship in Top Companies Outside Gender Pay Gap Threshold

Manisha Patel

Neobank Zopa Launches Major Ad Campaign Since Receiving its Banking License

Polly Jean Harrison