Consider a fully licensed European company that cannot receive money it is owed. A customer, marketplace or platform tries to pay into the company's account, but the payment is rejected because the company's IBAN begins with a country code the payer's system treats as foreign. The account is valid and fully reachable through SEPA, and no fraud or technical fault is involved. The payer's system has simply refused an IBAN issued in another member state, which is something the law does not allow.

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This is IBAN discrimination: the refusal of a valid euro payment or direct debit because the account, whether a traditional bank account or a multi-currency account, is held in another SEPA country. The practice has been illegal across the European Union since 2014, yet in 2026 it remains a routine obstacle for businesses. This article explains what IBAN discrimination is, which companies it actually affects, why even traditional bank customers are exposed, and how the type of IBAN behind your multi-currency account changes its chances of being paid on time.

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What IBAN Discrimination Is, and Which Businesses It Really Affects

Every IBAN begins with a two-letter code that identifies the country of the institution that issued the account, not the country where the account holder lives or trades. Because many leading digital banks and e-money institutions are licensed in a small number of jurisdictions, their business customers often receive an IBAN that starts with LT (Lithuania), BE (Belgium), DE (Germany) or NL (Netherlands), regardless of where the company actually operates. When a domestic payer or biller expects a local IBAN and their system refuses anything else, a perfectly valid account is turned away, a practice that consumer authorities have confirmed is against the law.

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The legal position is straightforward: under Article 9 of the SEPA Regulation (EU) No 260/2012, a business or public body cannot insist that a customer's or supplier's account be held in a particular country, as long as that account is reachable through SEPA. The EU Court of Justice reinforced this in 2019, ruling that requiring a domestic account is a form of unlawful IBAN discrimination. Despite that, the European Commission reports that discrimination based on account location continues, and that efforts to stop it have not yet succeeded.

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So which businesses are affected? Not marginal or high-risk operators, but ordinary, fully compliant companies. The most exposed groups include:

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• Freelancers, sole traders and remote teams that bank with digital providers.
• Small and medium-sized enterprises that centralise their international business payments into a single account.
• Cross-border and online businesses that sell into several EU markets at once.

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Their shared characteristic is geography: they hold an IBAN with a "foreign" country code.

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E-commerce sits squarely in the firing line. Of the 4,688 complaints logged by the Accept My IBAN platform between 2021 and March 2025, roughly one in ten came from the e-commerce sector, which means a large number of Europe's online merchants have already run into a rejected IBAN.

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The typical case looks like this: an online retailer opens a single account to collect revenue across the EU, then discovers that a national billing or payout platform quietly refuses its IBAN. When the merchant contacts support, staff insist the account is "not valid here," even though the law says otherwise.

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Documented cases show how ordinary the problem has become:

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• A Spanish e-commerce platform refused an Estonian company's Belgian IBAN.
• Germany's national transport ticket accepts SEPA direct debits only from German, Austrian and Swiss accounts.
• Motorway subscriptions, telecoms, insurers and utilities across France, Italy, Spain and Ireland have all turned away foreign IBANs, according to the ECC-Net position paper.

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The cost of these refusals usually falls on the company whose IBAN was rejected, even though the rejection happens on someone else's platform. The consequences are failed incoming and outgoing payments, involuntary customer loss, a rise in support requests, and the expense of opening extra local accounts simply to keep money moving. This is also why the payments industry, and not only consumers, pushed the issue onto the regulatory agenda. As early as 2018, a European Parliament question warned that fintech companies cannot realise their potential while IBAN discrimination persists.

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Bank Accounts Are Exposed Too, Even Within SEPA

Any business or individual holding an account issued in another member state can be refused, even on a standard SEPA transfer or direct debit that the law fully protects. A company that keeps its treasury in a single foreign bank, or an owner who lives in one country while banking in another, can hit exactly the same wall as a fintech customer. IBAN discrimination is triggered by where the account is held, not by the type of licence behind it, so the right to pay with SEPA across borders is often blocked in practice even when it is guaranteed in law.

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The exposure, however, is not spread evenly, and the data show where it concentrates. Among the foreign IBANs that were refused, ECC-Net found that 24% were Lithuanian, 23% Belgian and 22% German, which means almost seven in ten rejections involved just three country codes. These are precisely the jurisdictions where many of Europe's largest e-money institutions are licensed. In practical terms, customers of payment and e-money institutions are structurally more likely to present a "foreign" IBAN than customers of a domestic high-street bank, so they encounter the problem more often, while traditional bank customers with a cross-border account remain far from immune. Most complaints came from people and businesses based in France, Germany, Spain and Italy, with the refusing companies concentrated in the same four countries.

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For a sense of scale on the business side, an e-Residency survey from Estonia offers the clearest figure available.

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Among 952 company owners holding a non-Estonian IBAN, 29% reported experiencing IBAN discrimination, and that figure rose to 38% for owners based outside Europe. The impact was material rather than cosmetic: 15% said most of their business activity stopped as a result, while 63% said they could keep trading only by working around the problem.

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Once the cost of lost sales, delayed supplier payments and extra administration is added, what looks like an inconvenience becomes a measurable drag on revenue.

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Enforcement exists, but it is inconsistent, which is part of why the practice survives. In Italy, the competition authority (AGCM) fined major telecom operators, including Vodafone, Wind Tre and Fastweb, for refusing direct debits on foreign IBANs, with penalties reaching 800,000 euros per company.

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Speaking of penalties, they vary enormously between countries, from minimums of a few hundred euros to maximums of up to 10 million euros plus 10% of annual turnover, according to the European Commission. That inconsistency is itself a driver of the problem: in countries where penalties are weak, companies have little incentive to comply.

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There is, however, a clear regulatory tailwind. The Instant Payments Regulation (EU) 2024/886, together with the mandatory Verification of Payee service that has been live in the euro area since 9 October 2025, removes the two excuses businesses most often gave: that a foreign account could not be verified, and that it carried a fraud risk.

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Even so, the European Commission expects structural enforcement gaps to persist until at least the end of 2027. Until then, businesses should treat IBAN discrimination as an operating risk to be managed, not as a solved problem.

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How a Dedicated IBAN Protects Your International Business Payments

Not every IBAN carries the same risk of rejection, and the fastest way for a business to protect its international business payments is to control the IBAN it presents. The single most important factor is the type of IBAN behind the account, because it determines whether a counterparty can recognise and verify who they are paying.

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The weak point of many low-cost accounts is that they operate through a provider's master account. In a pooled or virtual IBAN arrangement, the name registered against the IBAN is often the provider's rather than the customer's. That mismatch has become a direct cause of rejection: when a counterparty, or now an automated Verification of Payee check, sees a name that does not match the business being paid, the transfer stalls. The European Banking Authority has warned that a virtual IBAN also carries money-laundering, deposit-protection and consistency risks, precisely because of this layer of indirection.

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A dedicated, named IBAN that is issued in the company's own legal name removes that ambiguity. The business name appears on both sides of every transaction, counterparties can confirm that they are dealing with a clearly identified legal entity, and name-to-IBAN checks pass cleanly. A named IBAN does not rewrite geography by itself, but it eliminates the most avoidable category of rejections, the ones caused by anonymous references and mismatched names. Combined with instant SEPA payments and Verification of Payee, a named IBAN is considerably harder to refuse.

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For any business that wants to be paid across Europe without friction, a dedicated, named IBAN inside a multi-currency account is the safer default. COLIBRIX ONE is built on exactly this principle, and gives your business:

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• A dedicated IBAN in your company's own name, not a pooled account behind a generic reference, so counterparties can immediately confirm who they are paying and your payments clear verification checks.
• A multi-currency business account in EUR, USD, GBP, CHF and PLN, so you can collect and pay in your customers' currencies from a single account.
• SEPA Instant transfers that settle in seconds, around the clock, alongside SWIFT reach across EMEA, APAC and the Americas, so cross-border payments move without hitting a "wrong country code" wall.
• A regulated foundation, under an MFSA-authorised e-money licence with regulated entities in the UK and Malta.
• Round-the-clock human support, so when a counterparty wrongly rejects a valid IBAN, you have someone to escalate with instead of an automated queue.

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Open your multi-currency account →

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One practical tool worth knowing is Accept My IBAN, an industry coalition of fintechs and e-money institutions. It collects reports of IBAN discrimination from across the EU and forwards them to national regulators and the European Commission, giving businesses a single place to flag a refusal and building the evidence base that pushes enforcement forward.

A short checklist for online merchants

1. Audit your exposure. Map every market where your store presents a "foreign" IBAN. If you sell into France, Spain, Italy or Germany, assume a higher risk of rejected payouts, direct debits and recurring payments.
2. Choose a named, dedicated IBAN over a pooled or shared one. An account in your company's own name passes the Verification of Payee and counterparty checks that pooled references tend to fail.
3. Hold local or country-specific IBANs where refusals keep happening, rather than opening a separate bank entity in every market.
4. Keep a record and escalate. Report each rejection to Accept My IBAN and to the relevant national authority, citing Article 9. It is free, and companies have reversed their policies or been fined under exactly this pressure.
5. Use the new rules as leverage. Since 9 October 2025, "we cannot verify a foreign account" is no longer a valid excuse in the euro area, so cite it directly in any complaint.
6. Select your provider deliberately. Favour one that issues IBANs in your own name, supports both SEPA and SWIFT, and gives you a real person to contact when a counterparty pushes back.