Is it allowed to offer customers different methods of payment when they make bookings over the internet, depending on where they live? My podcast partner today, Matthäus, has recently published a blog entry on this topic (News on IBAN discrimination) which is well worth reading. The case we would like to consider in more detail today concerns a legal dispute (case C-28/18) between a consumer protection association from Austria and Deutsche Bahn before the Court of Justice of the European Union (CJEU). The question is: Does it constitute IBAN discrimination if payers are treated differently depending on their place of residence?
What is the background to the case?
Imagine you live in Austria and would like to book a ticket online with Deutsche Bahn. You go through the booking process and when it comes to paying for the ticket you realise that unlike customers in Germany, you are not offered a SEPA direct debit as a method of payment. That is what happened. Deutsche Bahn only offers its customers in Germany the option to pay via SEPA direct debit; customers from abroad need to use other means of payment, e.g. credit cards.
Differentiation according to the payer’s place of residence also IBAN discrimination?
IBAN discrimination is about Art. 9 para. 2 of the SEPA Regulation. In accordance with this, a payee who accepts a credit transfer or uses a direct debit to collect funds from a payer who holds a payment account within the European Union does not specify in which member state this payment account is to be held, provided that the payment account is accessible.
In his Opinion, the Advocate General takes the view that it also constitutes undue IBAN discrimination if a merchant accepts SEPA direct debit payments only from customers who are resident in a particular member state. After all, an account would usually be held in the same country as the payer’s place of residence. In addition, considerations relating to credit scores would also not justify a differentiation according to the payer’s place of residence.
What will all this lead to?
How do we need to interpret the prohibition of discrimination in Article 9 para. 2 of the SEPA Regulation? Are there exceptions to the prohibition of discrimination and what justifications for unequal treatment could there be for payees? Is it not legitimate to consider credit scores? How should every customer in the EU be treated equally if there is not the same infrastructure for credit checks throughout Europe? And how does this relate to the Geo-blocking Regulation? What role does the Advocate General play and how likely is it that the CJEU will follow his Opinion? And what options do merchants still have if the CJEU follows the Advocate General’s Opinion? What consequences would this have for (domestic) payment methods – and ultimately also for customers?
Matthäus and I will talk about this and more in the 40th episode of PayTechTalk. Enjoy!
Further information and links:
- Blog entry “News on IBAN discrimination”: https://paytechlaw.com/iban-diskriminierung/
- Opinion of the Advocate General of 2 May 2019: http://curia.europa.eu/juris/celex.jsf?celex=62018CC0028&lang1=de&type=TXT&ancre
- “SEPA Regulation”: https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX%3A32012R0260
- Blog entry “Strong customer authentication for online SEPA direct debits: BaFin’s clarification”: https://paytechlaw.com/starke-kundenauthentifzierung-bei-einer-online-sepa-lastschrift/
- Blog entry “Geo-blocking regulation: The clock is ticking”: https://paytechlaw.com/en/geo-blocking-regulation/
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