By David Poole
The United Kingdom has voted to leave the European Union, and this has caused great uncertainty for the payments industry. One of the inevitable questions will be around EU regulation, in particular, the fate of the two Payment Services Directives. PSD1 is already part of UK law, and it is unlikely to be repealed.
PSD2, which has an implementation deadline of January 2018, will likely still be followed, as the UK has an incentive to keep payment rules similar to EU ones. As it is likely that we will retain some level of access to the single-market, PSD2 will still be implemented on the current timeline.
Licensing and passporting will need to be dealt with carefully. Financial services and payment companies will no longer be guaranteed a license to operate in other EU countries, and some have suggested they may even move their headquarters to other European markets. HSBC Bank PLC is reportedly set to move 1,000 staff from London to Paris if access to the single market is lost.
This threat was endorsed by François Villeroy de Galhau, a member of the governing council of the European Central Bank, who warned that London could no longer expect to enjoy an arrangement similar to what has existed and that with the resignation of Lord Hill, Britain's EU commissioner and the man responsible for overseeing the EU's financial services sector, must raise alarm bells. The UK will need to press hard to negotiate continued access to the single-market and to maintain the coveted "passporting" rights.
There are a number of models the UK could take when planning restructures from here, such as those adopted by Norway and Switzerland. There are also large markets full of opportunity for fintech outside the EU, such as Central and South America and East Asia. Emerging markets hold masses of potential for new payment and banking methods.
There is much uncertainty over the impact of the UK's exit from the EU, as much will depend on the negotiations that will follow. However, regardless of how much negative attention Brexit is receiving, the UK will remain an international benchmark for good corporate and regulatory governance, within or outside the EU.
Cutting through initial media hype and panic, the UK's exit from the EU is unlikely to signal the widely predicted doomsday for the financial services industry, including the payments sector. The fintech industry will remain innovative and forward looking and will overcome any potential issues that arise as Brexit unfolds. However, the current turmoil in the markets will likely continue until the uncertainty surrounding the UK's future relationship with the EU is resolved.
David Poole, Business Development Director at myPINpad (www.mypinpad.com), has spent more than 20 years at the forefront of new technology and payment processes. In previous roles he spearheaded the integration of electronic payments with custom POS solutions in hospitality and retail both in the UK and the United States. Before joining myPINpad in 2013, David was an executive at Miura, a technology company founded to reshape electronic payments. He can be reached at firstname.lastname@example.org.
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