Central Bank calls on businesses to prevent IBAN discrimination

IBAN discrimination has become an issue across European countries as an increasing number of firms provide services on a Europe-wide cross-border basis.

Regulated companies alongside business representative bodies in Ireland have been contacted by the Irish Central Bank in order to remind them to reinforce all organisations’ responsibilities under Single European Payments Area initiative (SEPA).

The Irish Central Bank has called on businesses to prevent IBAN discrimination.

IBAN discrimination has become an issue across European countries as an increasing number of firms provide services on a Europe-wide basis.

Regulated companies alongside business representative bodies in Ireland have been contacted by the Irish Central Bank to remind them to reinforce all organisations’ responsibilities under the Single European Payments Area initiative (SEPA).

As incidents of IBAN discrimination are continuing to be an issue across Europe, and in Ireland, the Central Bank of Ireland is writing to all Regulated Financial Service Providers in the country, and a range of business and professional representative bodies, to remind firms of their obligations under the Single European Payments Area initiative (SEPA).

SEPA enables payment service customers to make cashless euro payments to firms and individuals anywhere within the SEPA area using their International Bank Account Number (IBAN). 

IBAN discrimination occurs when firms refuse to accept non-Irish IBANs within the SEPA area. This is forbidden under the SEPA regulations.

The Central Bank stated that the presence of IBAN discrimination results in difficulties for both Irish and European consumers. It also creates barriers to the proper functioning of the payment system.

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Full compliance with SEPA regulations is particularly important as Ulster Bank and KBC prepare for their departure from the Irish market and many consumers relocate their accounts to a different payment service provider. 

A number of customers may wish to choose banks that only offer non-Irish IBANs. 

Speaking about this situation, Director of Financial Operations William Molloy said: "It is important that those customers who choose to use a PSP with a non-Irish IBAN are supported in doing so.” 

The Central Bank has contacted regulated firms and business representative bodies in Ireland to reinforce all organisations’ responsibilities under SEPA, and to offer information on how to prevent IBAN discrimination. Read more here: https://t.co/YJ3VZx9DBo pic.twitter.com/50umYzMSTc

— Central Bank of Ireland (@centralbank_ie) June 17, 2022

He continued: “Providers and facilitators of SEPA credit transfer and direct debit services must be aware of their obligations under SEPA. 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 (PSP) free from concerns about encountering problems when using their legitimate payment account details. 

"The SEPA regulations create a single market for consumers which supports choice and facilitates innovation in payments. Firms should take any actions required to achieve full compliance with the SEPA regulations, thereby preventing cases of IBAN discrimination from occurring at the outset," Molloy added.