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Government watch
What Does
Mean for Payments?
Viewpoint
By Tomas Likar, Hyperwallet
In Viewpoints, payments professionals share their perspectives on the industry. Paybefore’s goal is to present many points of view to
o er readers new insights and information. The opinions expressed in Viewpoints are not necessarily those of Paybefore. This article is intended for general information purposes only and should not be construed as legal advice. Readers are urged not to act upon the infor- mation without rst consulting an attorney.
For decades, London has enjoyed the undeniable position of being the European nancial capital.
Financial institutions—and, more recently, ntech startups—have used London as their base to access the European Union’s common market of 500+ million people. Whenever I was asked to advise companies on their Euro- pean go-to-market strategies, we sooner or later came to the same conclusion: “We have to open an o ce in London.”
Things changed on June 24 when the referendum results were an- nounced. Though we all knew Brexit was a possibility, we weren’t prepared for the new reality that
it now threatens to bring about. The impact on the U.K.’s citizens already have been well-debated: volatile currency, higher interest rates, impacted real estate valua- tions. But what will be the impact of Brexit on U.K.’s payments/ ntech industry? Let’s take a look at some of the most important factors we should pay attention to in the coming months.
Regulatory Complications
The chief impact of Brexit on all payments companies will be licensing. The Financial Conduct Authority (FCA), Britain’s regulatory
body, has been known to be friendly to global payments com- panies and new ntech business models. As a result, most global nancial technology companies established their European head- quarters in London, applied for the FCA e-money license and subsequently “passported” this license to all other European countries. With the U.K. voting
to exit the EU, these companies very well may have to apply for the license with a di erent regu- lator, such as German BaFin or Swedish FI. At that point, com- panies will need to decide whether to keep multiple European o ces or close their London o ces and move operations to the new country entirely.
In line with this point, Brexit likely will cause issues for major proces- sors and cross-border acquirers
for whom London has been a key European and cross-border pro- cessing hub. European privacy and data security laws require these processing centers to be based in the EU. It’s still unclear what the U.K.’s position will be in this regard, but if it were treated as an o - shore country (which seems a logical outcome), payments pro- cessing operations of hundreds
of companies could be forced to relocate to the continent.
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