When Single Market principles don’t work: Revolut’s case

Many consumers across Europe — in countries like Germany, France, and Portugal — are celebrating the fact that Lithuanian fintech company Revolut will now have either local headquarters and/or national branches. This means Revolut users will receive local IBANs (International Bank Account Numbers — the two letters at the beginning of a bank account number), sparing them the hassle of having to explain foreign account details to local vendors or public institutions.

Until now, for the European Union’s market, Revolut held a banking license for the European Economic Area (EEA) and operated under the supervision of the European Central Bank (ECB) and the Bank of Lithuania. Technically, all Revolut users had Lithuanian accounts, with “LT” at the beginning of their IBANs.

Single Market for fintechs: theory vs practice

In theory, the principles of the EU Single Market mean that all public and private institutions across EU Member States should accept Lithuanian bank accounts for payments. In other words, a Lithuanian banking licence is "passported" and valid throughout the EU.

In practice, however, many public and private institutions across Europe have refused to accept Lithuanian bank accounts with LT IBANs, treating them as non-local and creating barriers for users. While the Single Market framework allows for licence “passporting,” it often lacks the practical weight of holding a local licence, as supervisory authorities in different EU countries interpret, supervise, and enforce the rules inconsistently.

IBAN discrimination at play

Revolut has ambitious plans to become a true pan-European bank, and support from the French government, both domestically and in Brussels, certainly helps. However, it’s reasonable to suspect that so-called “IBAN discrimination” has also been a factor behind the company’s recent decision to establish its Western European headquarters in Paris.

This new hub is intended to serve users in France, Spain, Italy, Ireland, Germany, and Portugal. Revolut has also submitted an application to the French banking regulator — the Autorité de Contrôle Prudentiel et de Résolution (ACPR) — to obtain full banking rights, and is currently in the process of recruiting and transferring a significant number of existing employees. Vilnius HQ will continue servicing the Baltics, Eastern Europe and the European Economic Area (EEA). 

Revolut is rolling out local IBANs in France, Ireland, Italy, Germany, Spain, and the Netherlands. It recently announced plans to offer them in Portugal as well. Last year, the same change was made in Romania.

While European Union leaders continue to reaffirm — and even seek to strengthen — their commitment to Single Market principles and ensure harmonized application of European rules, Revolut’s shift toward local markets shows that the payments sector has been largely neglected. The issue is complex: both private and public institutions have contributed to IBAN discrimination, and existing oversight mechanisms have clearly proven insufficient. 

Businesses adapt to deliver better and more accessible services to their customers, but Revolut’s case serves as a reminder that, in practice, the Single Market has not fully delivered on its promise.