Brexit exclusive: UK firms face IBAN discrimination across EU as GB payments are refused
As the clocks turned 2020 into 2021 the UK left the European Union after 47 years. The decision divided the country, and businesses everywhere were forced to adapt to, and comply with, new regulations.
Certain industries were more affected than others, and businesses which had some sort of international presence benefited from a smoother transitioning period, according to Will Marwick, since February of this year the CEO of IFX Payments, which is based in Baker Street.
In an exclusive interview with Morning Wire, Marwick said “it could be argued that due to the nature of international capabilities inherent in the sector and its continued ability to stay agile, players in the payments industry were perhaps one of those lucky ones.“
Yet, a key consideration and a massive point of debate was whether London would remain the centre of the financial services sector, and if not, what would the repercussions be for businesses.
Regulatory changes
For the payments sector, the UK’s Financial Conduct Authority instituted a Temporary Permissions Regime (TPR), which enabled registered European payments firms to continue operating in the UK without relicensing through 2024,
However, the European Central Bank has been more robust, which Marwick said has “spread a sense of uncertainty across the board”.”
“It wasn’t just new regulations which threw many businesses, but the issue of successfully managing and retaining an international workforce,” he explained.
“As companies were forced to adapt, the financial industry saw the underdogs leading the charge, as smaller firms proved to be more agile and resilient to the ever changing Brexit landscape,” Marwick continued.
In comparison, pre-Brexit the payments sector was “seamless, cross-border and collaborative”, he said, adding that “like many industries, within payments it was easy to access multiple markets as trading was not as limited.”
The imposed regulatory changes introduced in the past seven months have, according to Marwick “made everything more challenging”, forcing the industry to focus on digitalising its offering and cementing its international capabilities, “in order to stay competitive and future-proof itself,” he noted.
Brexit has made everything more challenging
Will Marwick
Many industry players report IBAN discrimination being a major issue as a number of companies across Europe began to refuse Euro account bank details “if they contained the country code ‘GB’,” Marwick said.
As a result of Brexit, sending a payment to Eurozone countries resulted in additional charges. Whilst the fee is nominal, it means that payments can be short of the required full amount being sent.
Marwick stressed that “this new imposed fee has caused an unnecessary amount of disruption and operations teams have been tasked with managing flows into different accounts to mitigate unforeseen costs arising.”
Mitigating the impact of Brexit
In a bid to mitigate the impact of Brexit and futureproof growth, international capabilities were key for fintechs to navigate this challenging time.
Marwick claims that “those who were already programmed to integrate with global data fields were able to move seamlessly into new markets” and that “being able to identify which global industries benefit from what types of financial systems allowed fintechs with pre-established international operations to mitigate any disruption”.
Brexit has not changed the need for cross border payments, rather only the operational functionality and regulatory requirements, he argued.
“Having established experts in multiple fields reduces the time spent by management members imposing new legislations and regulations, many of which are interpreted at each local regulator’s absolute discretion, Marwick concluded.