The Impact of Brexit on the Card Payments Industry

in Blog Post, Card Machines, Industry Trends, Small Business 2nd June 2017

Here at Card Cutters, we like to share with you the latest news and views from across the Business, Financial and Card Payments Industry, to make sure our merchants and our followers are kept up to date on the latest updates affecting the sector.

Our latest article The Impact of Brexit on the Card Payments Industry brings together some of our own thoughts on this topic.

The Impact of Brexit

When the United Kingdom voted to leave the European Union in 2016, it came as a surprise to not only the public but also the UK’s many businesses.

Businesses, including Card Cutters, have begun to think about the potential updates to Policies and Legislation we will need to be aware of in the coming years.

The Payment Services Directive Legislation

Within the UK, the payments industry must be aware of and adopt the legislation outlined in the Payment Services Directive (PSD). The original PSD Legislation came into force in the UK and Europe in 2007 with the aim to help develop a Single Euro Payments Area (SEPA) which will set the standards, regulations and maximum processing times within the Card Payments Industry. In 2016, pre-Brexit Voting, a new updated Payment Services Directive the PSD2 has been updated and is set to come into effect from January 2018. However, with Brexit now well on its way, will this Legislation now need updating again?

The Impact on Interchange Fee’s

The Interchange Fee is the fee paid between a Merchant Bank and a Customer’s Account for Card Payment Services and is usually managed by the Card Issuer themselves.

Changes in European Interchange Fee Regulations in 2016 has seen maximum Caps imposed within Europe for charges to Merchants for offering Card Payments to its customers.

The big question going forward will be how Brexit may impact The Interchange Fee Regulation currently in operation throughout Europe and whether the changes due to Brexit will alter any current obligations.

Data Protection and Security

Within the UK (and Europe), we have a myriad of European Laws, Regulation, and Systems that UK Businesses must abide by to ensure Data Protection and Security are maintained for both Customer and Business Data.

However, once the UK leaves the European Union, what will Data Protection and Security look like as a possible Off Shore Location, where these rules and regulations may no longer apply?

Does this mean the UK will set its own Regulation, Law, and Systems or will we still be able to utilise the European Union’s Laws in a standalone capacity?

Exchange Rates

All Businesses who trade within the UK and Europe understand the importance of Exchange Rates and the impact it has on Profits for the Business. This is also the same principle for Merchant Service Charges within the Card Payments Industry as transactions can be taken in Sterling, Euro’s and Dollars which are regularly changing. What will Brexit bring I the stability of Exchange Rates in the future?

Reclassification of Card Machines

The Card Machines that are widely used across the UK and Europe by a wide range of businesses may be affected following Brexit. The decision from Card Machine Providers and Card Issuers on whether the Card Machines will be reclassified as International or Inter-Regional will need to be made in advance so that both Merchants and Customers understand any changes that this may make to the charges they are issued with when paying for goods and services by card within Europe.

Restricted Market Access

The Card Payments Industry like other Sectors will need to be clear on Market Access to the European Market in the wake of Brexit.

The requirement to obtain licenses for being able to offer Payment Services are currently coordinated across the European Union. Will Brexit see this change?

Payment Issuers who have licenses within the UK could face restrictions with Europe going forward and vice versa. No one can say for sure if this will be the case yet, but the question is will the innovation and growth within the Payments Industry be affected?

In Conclusion

None of us knows yet the real impact that Brexit will have on the Card Payments Industry, but you can rest assured that Card Cutters will make sure that any updates required as part of the Brexit Strategy will be as seamless as possible for our Merchants and your customers.

Look out for more updates from Card Cutters on this and other topics in the future.

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