• Andre Malinowski, Head of International Business at Computop


• 30.06.2016 08:45 am
undisclosed

Whilst, the biggest risk of the Brexit result appears to be to London’s role as a global financial centre, it also presents challenges to international businesses and trading as a result.  The UK will go from a rule maker to a rule taker in relation to Europe.  It will have to comply with EU regulations like the rest of the world, with no say in how those regulations are developed.  Whether the UK financial sector can withstand such a big change without serious consequences will depend on the deal that the UK government negotiate in the case of a ‘leave’ vote and the speed and agility with which the UK’s financial institutions are able to adapt.  

It is very likely that The European Banking Authority (EBA) will move its head office out of London and to either Paris, Frankfurt, Milan or Dublin..  Also, within the UK, The Financial Conduct Authority (FCA), which has worked hard within the EU to establish a good reputation within the European payments scene for its understanding and regulatory regime, is likely to suffer too. European eMoney and Payment Institutions are now much more likely to move their headquarters to other European markets taking innovation and the bulk of the smartest workforce with them. The UK Government will need to be creative and quick in their negotiations to keep skills and jobs based in the UK.

For payment specifically, I believe that the major change will be in the areas of licensing and passporting. This will affect the UK’s cross border acquirers the most.  Numerous UK acquirers rely on the FCA passporting regulatory license to support their local acquiring offers across the EU. Unless they already have licenses in other EU markets, acquirers will need to apply for new EU regulatory licenses to operate across the continent. This will increase both administration work and cost. They will need to hand out and sign new merchant contracts with new and existing merchants. It could go so far that the UK will be treated as an off-shore location for card and payment processing, inheriting the related fees.