We’ll always have SEPA – or will we?Nizam Yusuf
What does the EU Referendum Leave Vote mean for SEPA Users in the UK
Will a Post-Brexit Britain remain part of the SEPA scheme? Will UK business still be able to collect Euro payments? Will the UK government have to adhere to EU legislation? These are just some of the few unanswered question that have surfaced following the EU Referendum leave vote.
As the British government comes to terms with the financial and economic aftermath that has followed since the British public decided they were better off without the EU, many senior business leaders, CXOs, founders and investors have begun to question 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 responding to a Brexit, those in charge of day-to-day business operations have questioned their ability to fulfil their roles effectively – especially those within the finance sector.
Are there any immediate changes?
As a member of the EU, the UK is also a participant of SEPA, a single market for processing electronic payments across Europe. In addition to every EU member state, SEPA includes seven non-EU European countries and territories, which 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, what we can say with reasonable certainty is that whilst Britain remains part of the EU, there will be no immediate membership changes to restrict UK businesses in their ability to send and receive SEPA payments.
Precisely what will happen to the UK’s position in two years’ time (from the point Article 50 is triggered) within the EU remains to be seen. However, with SEPA having set a precedent for allowing non-EU European countries access to the payment market, it is highly unlikely that the UK will be asked to abandon their participation in the SEPA scheme upon leaving the EU.
The seven non-EU European countries that are currently part of SEPA have been assessed to have a regulatory regime equivalent to that of the EU. Consequently, 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 legislations and regulations will have to be equivalent to the corresponding EU framework, with all future EU changes being enforceable upon the UK financial services regulations. The question which then remains to be seen is how much of that 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 ability to send and receive payments across Europe in the same manner as transactions are processed within the UK.
The ease and transparency of paying suppliers with electronic payments or setting up a recurring customer direct debits, in the same manner as they would do with Bacs, has allowed UK Businesses to effortlessly integrate SEPA payments and collections into their business processes. It is therefore understandable why senior stakeholders would be somewhat concerned about losing this service.
Future of SEPA
In addition to the existing benefits, the anticipated Pan-European real-time payments system, which has the potential to allow an instant, ubiquitous payment channel across Europe, is big factor for the UK to remain part of the scheme.
When the innovative real time payments system comes into place (currently scheduled for November 2017), allowing SEPA users across Europe to send and receive payments instantaneously, then UK businesses would be at a competitive disadvantage compared to their European counterparts.
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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 if and when Brexit takes place.