(CN) - Europe’s highest court ruled against the German railway Deutsche Bahn on Thursday for allowing passengers to book online with a direct debit card only if they are German residents.
The debit scheme in the EU is known as SEPA, a project by which officials seek to replace national payment services with one “single euro payments area.”
Deutsche Bahn includes the SEPA direct debit scheme as one method of payment, along with credit card, PayPal and credit transfer. According to the ruling, however, a SEPA payment “is only accepted subject to the observance of several conditions, namely that the payer have a place of residence in Germany, that he consent to the direct debit being taken from an account held with a bank or savings bank that has its registered office in a SEPA-participating state, that he instruct the bank or savings bank to honor the SEPA direct debit and that he register on the Deutsche Bahn website.”
“In addition, in order to activate the SEPA direct debit scheme, the payer must give his consent to undergo a credit check,” the ruling continues.
Austria’s Consumer Information Association, abbreviated in the national language as VKI, filed suit, and the Fifth Chamber of the European Court of Justice ruled Thursday in its favor.
“A clause such as that at issue in the main proceedings is liable to undermine the practical effect of [EU law], since it prevents payers from being able to make a direct debit from an account located in the member state of their choice,” the ruling states. “That clause therefore frustrates the objective pursued by that provision, that being, … to prevent business rules from undermining the development of an integrated market for electronic payments in euros.”
Deutsche Bahn failed to sway the court that the need to credit-check payers makes the residence condition justifiable.
“As the [European] Commission noted during the hearing, nothing prevents a payee from reducing the risk of abuse or of default on payment by, for example, providing that delivery or printing of tickets will only be possible once the payee has received confirmation that the payment has actually been collected,” the ruling states.
The ruling from the European Court of Justice came four months after Advocate General Maciej Szpunar also found discrimination in Deutsche Bahn’s policy.
Szpunar’s opinion was not binding, however, on the Luxembourg-based forum, which was asked to decide the case by the Supreme Court of Austria.
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