23rd Jun 2016

We’ll always have SEPA…or will we?

What does the Brexit Vote mean for SEPA users in the UK?

January 2021 Update: Post-Brexit, the UK maintains participation in SEPA and we continue to provide SEPA payments solutions across both the UK and the EU. However, this important change will make the SCT/SDD rules applicable to transactions from/to non EEA-jurisdictions also applicable to transactions with the UK. Click here for more info.

Original Article first published June 2016:

Will a post-Brexit Britain remain part of the SEPA scheme? Will UK businesses struggle to collect Euro payments? Will the UK government have to adhere to EU legislation?

These are just some of many unanswered questions to surface following the unexpected results of the EU Referendum.

As the British government comes to terms with the financial and economic aftermath of the referendum, many senior business leaders, CXOs, founders and investors have started questioning the long-term viability of trading from a non–EU United Kingdom.

In addition to clamouring the bookshelves to see what their contingency plans say about Brexit, those in charge of day-to-day business operations are voicing concerns regarding their ability to fulfil their roles effectively. Especially those within the financial sector.

Are there any immediate changes?

As a member of the EU, the UK is a participant of SEPA; the single market for processing electronic payments across Europe.

SEPA includes every EU member state, as well as 7 non-EU, European countries and territories. These include: Norway, Switzerland, Iceland and the four European Sovereign States of Monaco, San Marino, Liechtenstein and Andorra.

Although diplomatic discussions are still up in the air (and will be for some time), we can say – with reasonable confidence – that for as long as Britain remains part of the EU, there will be no immediate membership changes to restrict UK businesses from sending and receiving SEPA payments.

It’s uncertain what the future holds for the UK after Article 50 is triggered in 2 years time.

But with SEPA setting a precedent for allowing non-EU countries to access the payment market, it is highly unlikely that the UK will be asked to abandon their participation in the SEPA scheme.

Catch 22

The 7 non-EU European countries currently part of SEPA are assessed as having regulatory regimes equivalent to that of the EU.

Consequently, it seems increasingly likely that; in order to participate in post-Brexit SEPA, the UK will almost certainly have to adhere to third-country EU regulatory provisions.

This will inevitably mean UK financial services legislation and regulation will have to be equivalent to the corresponding EU framework. With all future EU changes being enforceable upon UK financial services regulations.

The question which remains to be seen is what a non-EU, nationalist UK government is willing to accept.

Why in a post-Brexit EU would businesses want to remain part of SEPA?

Businesses of all shapes and sizes have come to appreciate the simple, time-saving dimension SEPA adds to sending and receiving payments across Europe. It’s very much in the same manner as transactions are processed within the UK.

Paying suppliers or setting up recurring customer direct debits in the same manner as they would with Bacs, has allowed UK Businesses to integrate SEPA payments and collections effortlessly into their business processes.

This explains why many senior stakeholders are anxious about the effect on their business if they lose the service.

Future of SEPA

In addition to SEPA’s existing benefits, the anticipated Pan-European real-time payments system is a big reason for the UK to remain part of the scheme.  This is because it has the potential to allow an instant, ubiquitous payment channel across Europe.

So when the innovative real time payments system comes into place (scheduled for November 2017), UK businesses could find themselves at a competitive disadvantage to their European counterparts.

Additional Information:

Euro (EUR €) area countries – 19 Countries

Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta,

Netherlands, Portugal, Slovakia, Slovenia, Spain,

EU Member States with currencies other than the Euro – 9 Countries

Bulgaria (BGN), Croatia (HRK), Czech Republic (CZK), Denmark (DKK), Hungary (HUF), Poland (PLN), Romania (RON), Sweden

(SEK), United Kingdom (GBP)

Non-EU countries (including the 4 EFTA countries)

Switzerland, Iceland, Norway, Liechtenstein, Monaco and San Marino and Andorra – it is anticipated the United Kingdom will join this group after Brexit, however it all depends on how negotiations go down in Brussels