IBAN Discrimination

IBAN discrimination is the practice of rejecting the payout or receipt of funds based on the origin of an IBAN.

While "discrimination" might not be a word that's commonly associated with everyday finances, it can most certainly apply here too. In fact, ever since the adoption of the IBAN system in the early-2010s, many cases of IBAN discrimination have surfaced, some of which committed by high-profile companies.

In 2020 and 2021, following the UK's departure from the EU, several digital banks warned of the prevalence of the trend to their customers, many of whom rely on using their IBANs for payments across borders.

What Is IBAN Discrimination?

IBANs are the primary way bank accounts are demarcated across most of Europe, and they contain essential information about an individual account. In this way, IBAN discrimination occurs when a merchant refuses to trade with one of these numbers solely based on the country in which it was issued.

National IBANs, which are distinguishable from one another due to their first two letters (e.g. "IT" for Italy and "GB" for the UK, etc.) are all equal in the eyes of EU law, meaning that IBAN discrimination is illegal inside the bloc. Infringements can result in hefty fines for merchants found responsible.

On the other hand, outside of the EU, the practice of IBAN discrimination is sometimes commonplace and tends to be less frowned upon.

What To Do When Facing IBAN Discrimination

If you're a citizen of the EU and you find yourself a victim of IBAN discrimination, there are several steps you can follow. Fortunately, you'll have the law on your side, and, as a result, you've got a very fair shot that your issue can be resolved smoothly.

First, you should write a formal letter of complaint to the merchant you believe discriminated against your IBAN. Describe the incident's details and indicate that IBAN discrimination is illegal under Regulation No. 260/2012 of the EU. Some merchants make mistakes, so we firmly recommend that you voice your grievances directly to them before considering taking any further action.

Some major digital banks have provided resources (including letter templates) for their customers to use if they fall victim to IBAN discrimination. A few of them include the following:

Should the merchant persist in refusing to accept your IBAN, then the next step would be to approach the relevant authority in your country to report them. You can find a list of which authority is relevant to you here. Alternatively, you can also submit your case onto, a website launched by TransferWise, Revolut, Raisin, and N26 to allow victims of IBAN discrimination to report their incident to the relevant authorities.

Reporting the merchant to the authorities is the most drastic step you can take, and will in all likelihood resolve the issue, albeit over the long while.

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