Bank Passporting is a cornerstone of the financial services sector
The UK payments industry is world-leading, and its Fintech sector is estimated by HM Treasury to be worth £6bn. The UK is likely to leave the EU in 2019 and when it does, it could potentially lose its passporting rights to the European single market.
Without such rights, many regulated payments companies in the UK will be unable to deliver products and services across the European Economic Area (EEA). The UK which has been called the Fintech capital of world, beating the likes of Silicon Valley, could have its crown toppled as restrictions of passporting rights will damage the emerging payments industry significantly. GPS are a global transaction processor that provides card processing technology on behalf of banks and emoney issuers. We are already seeing the clients that work with issuers in the UK explore other regions as “friendly bases”. The Emerging Payments Association recently published a white paper identifying six regions that may be considered as defensive plays if the UK losses its rights to passport. The countries identified were Cyprus, Denmark, Luxemburg, Ireland, Malta and Sweden. The report concludes that the UK is the best jurisdiction in which to be a regulated payment company. It is the only country that scores positively across all the selection criteria used. However, if push comes to a Brexit shove, which is definitely on the cards, then every regulated payments company (PSP) will have to consider its options. As the report outlines, there are some very good alternatives to the UK available and some specialists to ease the path. The UK government needs to be aware that if passporting is not addressed as part of the Brexit negotiations then these real and viable options could entice many of the UK Treasury’s estimated 60,000 FinTech employees to move their operations abroad.
MD at Global Processing Service
This article first appeared here