Brexit Signs: How the Vote Might Affect Payment Cards

The big financial news this week, of course, is Britain’s surprise vote to actually leave the European Union, in all the economic arrangements that came with being part of it — like visa-less travel within the EU, ease of trade among nations, etc.

True, Britain has always kept its Pound, as far as currency, so has no “Euro” to give up. But as a country that was part of the “E” of those “EMV” standards we keep writing about (“Europay Mastercard Visa”), what, if anything, happens now to international payment protocols with Britain’s seeming withdrawal?

As TheStreet reports, “using plastic to make payments abroad will likely become more complicated after the United Kingdom’s decision to leave the European Union, a prospect that hurts U.S. companies issuing credit cards and processing payments.”

Of course, it’s not known yet what sorts of complications those might be — but the mere anticipation has already sent stock prices of companies like AmEx and Visa down by about 6% since the vote (as of this writing).

As the article continues, “the details of Great Britain’s departure, including what trade agreements it might retain with the 27 countries remaining in the European Union, may take years to work out.  Analysts have cautioned, however, that the move might cost finance companies that based their European operations in London the so-called passporting privileges that let firms with a license in one member country conduct business in all of them.”

So aside from the fact that payment card companies may not want to locate their European headquarters in London’s financial sector, what else can we expect?

According to the DigitalTransactions site, “when the U.K. leaves the European Union, the pending EU regulation is officially no longer applicable to it, which will create uncertainty around the legal framework of payments between the U.K. and the EU. There is therefore a risk that the U.K. will in the future operate on different payments laws, making it more expensive to do business.”

Pymnts. Com says that post-Brexit, in “FinTech the picture gets murkier. The key lure for a unified payments structure — a rocket ship being flown as it is being built at least in FinTech — is to streamline processes, and now that is all the harder with borders that are now likely to be closed, or at least harder to transverse. The fact that the U.K. can (and likely will) go its own way in the wake of no longer having to follow the E.U.’s payments lead means that eCommerce may suffer a bit.”

The larger worries, though, may be more along recessionary lines, such as those outlined in a recent Strawhacker study, cited by DigitalTransactions: “Less spending means less transaction volume for those in the payments ecosystem, including card brands, issuers/banks, processors, acquirers, and other technology providers. With 23% of global card purchase transactions occurring in Europe, the shockwaves will be felt.”

Still, all of this may take awhile to play out regardless — while some parties in the UK are still looking for a way to reverse course and “exit the Brexit,” as it were.  For primarily U.S.-based businesses with U.S.-based customers, the payment sphere shouldn’t be affected too profoundly, at least in terms of protocols and standards.

The question will be to make sure there are enough customers around who want to keep spending. AVPS is here to help you make that as easy, convenient, and safe for those customers as possible. After all, there may be “Brexit” signs popping up, but that doesn’t mean everyone is obliged to follow.

On which note, speaking of our British colleagues — Happy 4th! We’ll see you after the holiday!

 

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