The option to pay by SEPA direct debit cannot be subject to a condition of residence in the national territory

The Verein für Konsumenteninformation, the Austrian Consumer Information Association, challenges before the Austrian courts a clause included in the general conditions of carriage of the German rail transport company Deutsche Bahn, according to which tickets booked on Deutsche Bahn’s website may be paid for by means of the SEPA direct debit scheme 1 only if the payer is resident in Germany.

The Oberster Gerichtshof (Supreme Court, Austria), hearing the case, asks the Court of Justice whether such a contractual clause is contrary to EU law.

By it’s judgment of 5 september 2019, the Court answers that question in the affirmative: the EU regulation on credit transfers and direct debits in euro precludes a contractual clause, such as that at issue, which excludes payment by means of the SEPA direct debit scheme where the payer does not have his place of residence in the same Member State as that in which the payee has established his place of business.

Since consumers most often have a payment account in the Member State in which they are resident, the requirement to have a place of residence in the national territory indirectly amounts to indicating the Member State in which the payment account must be situated, which the payee is expressly prohibited from doing by the regulation.

By such a prohibition, the regulation aims, in respect of payments by direct debit, to allow consumers to use a single payment account for any transaction carried out within the European Union, thus reducing costs associated with maintaining several payment accounts.