Within a matter of months, the implications of the breakup between Britain and the EU have brought a litany of headaches for businesses and consumers alike. As the new chapter develops, a complex regulatory outlook has weakened confidence around maintaining a seamless transition, particularly in the payments landscape.
A number of challenges are unfolding in relation to the efficiency of U.K.-EU commerce. Now, under the current agreement, payment providers authorized in the U.K. no longer hold EU passporting rights. The consequences of this are stark given that this can prevent certain providers from establishing branches in EU member states and offering services.
As it stands, the European Central Bank (ECB) has stated that if U.K. entities wish to operate in European markets, they must be fully licensed and acquire passports. Many U.K. payments companies have combated this issue by creating EU subsidiaries to comply, yet this can come at a cost for consumers. One example where this could prove an issue is the recent news that Mastercard increased fees for EU firms when receiving payments for U.K. online shoppers.
In light of this, providers on a mission to maintain leadership roles in the open banking sector will leverage open banking technology to allow payments to take place within and across borders. In doing so, consumers can execute payments to their chosen merchant without the need for debit or credit card transactions. We’ll also see popularity grow in favor of digital wallets – where users store funds for future online transactions on a prepaid account – making it even easier for providers as the only requirement is an e-license versus a banking license.
What will become even more essential for businesses in a post-Brexit landscape will be a greater move towards transparency. This applies to both the businesses who increase uptake of their technologies as well as customers who must ensure they are fully aware of changes in payment costs and make consumers also aware of the best payment methods for them. Only then will payment providers be on a better track to reassuring customer confidence in a continued period of uncertainty.
Looking ahead, for the U.K. payments industry to be in the best position to succeed, keeping consistent with compliance to both U.K. and EU regulations will be critical. In order to match the evolving effects of Brexit, being proactive and agile in response to emerging barriers will mean all the difference in guaranteeing a seamless payments experience for all.