The days and weeks following the Brexit vote were packed with reports about what the ramifications of such a move would be. No country has left the European Union before, so Great Britain’s choice to do so was not only surprising, but concerning to many in industries impacted by it.
One industry that could sustain some changes following Brexit is the payments industry. Payment Week pointed out that mobile payments are a profitable market in Great Britain, and London has a reputation for being a financial hub for much of the world, and especially Europe as a whole. The break could result in some shifts in the way these industries operate.
Beyond mobile payments alone, any business that processes payments could be affected by Brexit. Retail TouchPoints contributor Andre Malinowski explained that the move could invalidate licenses issued by the European Central Bank for businesses that operate in the U.K. Additionally, U.K. banks may no longer be able to provide services to other European countries.
These changes could push not only jobs but also transactions into new countries that were previously located in Great Britain.
Furthermore, American businesses that had been operating in the U.K. will likely need to seek out contracts for payment providers and data centers in other countries that are still within the European Union to continue doing business in the EU. This is because a license to provide payment services in one country in the EU can fairly easily be transported to another country in the union, Payments Cards & Mobile explained.
When a U.S. retailer wants to expand the business to Europe, it usually goes through the U.K. because it has more relaxed laws and there is a slim chance of a language barrier, Malinowski noted. The result is that many U.S. businesses that have extended their operations to Europe are mainly going through the U.K.
Time will tell
Despite these potential outcomes, the truth is that no one knows for sure, and most of the effects won’t happen right away. Payments Cards & Mobile pointed out that the Bank of England has stated that the earliest the U.K. would be able to officially break away from the EU would be 2018.
While there are plenty of scenarios that could cause U.S. and U.K. retailers alike to change the way they do business, there are several others that won’t have much of an effect on things at all. For instance, the U.K. could leave the union while maintaining its status through a series of bilateral agreements. Or, it could remain a part of the EU but with a downgraded status, such as an European Economic Area. Both situations would maintain a lot of the agreements between the U.K. and the rest of the EU and retailers and banks wouldn’t experience much in the way of changes.
Only time will tell what Brexit has in store for businesses around the world. Though there are many theories and possibilities, both good and bad, chances are the mobile payments industry won’t be affected very much, Payment Week concluded.