What is Brexit?
Brexit describes the United Kingdom’s withdrawal from the European Union. Gibraltar will also leave the EU. The withdrawal of the United Kingdom from the European Union will have repercussions for citizens, businesses and administrations in the United Kingdom, Gibraltar, the European Union and the European Economic Area (EEA).
What is the European Union?
The European Union is an economic and political partnership involving 28 European countries. It began after World War Two and was designed to promote economic co-operation between European countries.
It has developed into a single market that allows goods, money, services and people to move throughout the Union with minimal restrictions. The single market was created by removing regulatory, technical, legal, bureaucratic, cultural and protectionist barriers to trade.
Why is Brexit happening?
A referendum was held on Thursday the 23rd of June, 2016. The people of the UK voted to leave by 51.9% to 48.1%.
When will the UK leave?
It is most likely that the United Kingdom will leave the European Union on the 29th of March, 2019. There may be a transition period that operates between the 29th of March, 2019 and the 31st of December, 2020. The UK will not be a member of the European Union during this period, but many EU rules will continue to apply. There is a small possibility that another referendum may take place, and/or that the deadlines may be extended to allow for a general election in the UK
Why is Brexit important for SafeCharge and Merchants?
Some of the changes that might result from Brexit include:
- Changes to the validity of UK-issued licences, certificates and authorisations within the EU and EEA;
- New conditions for data transfers;
- A potential devaluation in sterling;
- Changes in taxes; and,
- Changes in the regulation of financial services.
Of particular importance are the changes to the free movement of services. EU rules on ‘passporting’ allow financial services firms, such as SafeCharge that are authorised in the EU (Cyprus) to provide services in other EU States including the UK. This arrangement is almost certain to change. Changes to the rules related to the free movement of services may affect the way that some merchants offer services across borders. They may need to obtain a licence and conduct operations both in the UK and in the EU 27.
What is the ‘transition period’?
This is the period of time between the 29th of March, 2019, and the 31st of December, 2020 designed to allow businesses and others to prepare for new post-Brexit rules. Free movement of people, goods, services and capital will continue during the transition period.
The European Union has said that in ‘the absence of an agreement on a withdrawal agreement, or if the Withdrawal Agreement is not ratified in time by both parties, there will be no transition period and EU law will cease to apply to and in the United Kingdom as of 30 March 2019’. The EU advises that ‘everybody concerned needs to be prepared for the withdrawal of the United Kingdom from the European Union on 30 March 2019’.
What will the rules be after Brexit and any transition period?
It is impossible to say with any certainty at this point. While the agreement on the future relationship may be ratified, it will not be legally binding, and substantive negotiations will not commence until after the United Kingdom’s withdrawal.
What happens if there is no agreement?
Without an agreement on withdrawal, there will not be a transition period. Some analysts suggest that there would be customs checks and tariffs on goods entering and leaving the UK, long queues at border checks and substantial disruption to the UKs’ economy. Other analysts suggest that the disruption would not be significant.
What is SafeCharge doing to mitigate this risk?
To protect against this risk, we have added the capability to offer services from the within the EU and also from within the UK. This approach avoids the need to provide services across the UK’s borders and insulates our services from the risk of disruption.
To this end, we have launched a UK based, FCA licenced Institution: SafeCharge Financial Services Limited. This will complement the services currently offered through our Cyprus based licenced Institution, SafeCharge Limited.
To facilitate an orderly transition in the event of a ‘hard’ or ‘no-deal’ Brexit, SafeCharge has received Transitional Authorisation to participate in the FCA’s ‘Temporary Permissions Regime’. This means that SafeCharge Limited will be able to continue to operate in the UK in the absence of a withdrawal agreement.
There are a lot of uncertainties surrounding what could happen. SafeCharge is preparing for all scenarios to ensure we minimise the impact on our customers. The passporting rules are likely to change so if you are operating in EU and or the UK, get in touch with us to find out how SafeCharge can support your business post-Brexit.
Speak to your Account Manager to learn more about the changes brought on by Brexit and how to manage them.