With the UK having officially left the European Union, agreeing a deal in the process, there are certain things that have changed in terms of the way UK businesses and private individuals deal with the EU.
One of the more significant changes has been that there is now more ‘red tape’ associated with trading with and operating supply chains to and from the EU. There are however other elements of the UK and EU’s future relationship that are still to be penned in, mainly when looking at the services sector, including, of course, financial services.
Whilst agreements surrounding financial services are trashed out between both sides, it is important to understand what processes and rules apply in the interim, not only to ensure you are able to move funds in the most efficient way but also to ensure you are not caught out by additional charges.
Heading into the end of 2020 the Bank of England warned that businesses and individuals may experience some disruption when it came to international payments as we moved out of the transition period. Despite the UK leaving the EU, it remains part of the Single Euro Payments Area (SEPA), allowing EEA member states and other non-EEA countries to transfer Euro payments efficiently at a low cost.
Although the UK remains part of the SEPA, additional information is now needed when making payments between the UK and EU. Payment service providers in the UK are now required to provide the full name and address of the payer who is transferring funds, via debit or credit payments, to a European Economic Area state. Some international payment providers such as Currency UK were already providing this additional information when making Euro payments meaning they have not had to change their current processes. In simple terms, there is now more information to be processed and therefore more work involved when making a payment between the UK and EU.
How could this affect you?
There are a number of our customers who have found their banks charging them for receiving Euros; when they did not previously (pre-Brexit). So far this seems to be limited to Spanish account holders. It seems that some banks have introduced new terms under which they charge some customers a management fee, based on where the payment originated from (or perhaps their registered address).
As we send 95% of our Euro payments via SEPA - an EEA wide, low cost, payment infrastructure that the UK remains a part of regardless of Brexit, we want to assure our customers that we are aware of this issue. The Spanish banks should NOT be making these charges as the UK is still part of SEPA, and we do have a number of solutions to this issue. In the meantime, we will refund the charges as and when they occur to ensure our customers are not overpaying for their UK to EU transactions.
If you have been affected by this and have experienced additional charges on UK-EU payments post-Brexit then feel free to reach out to one of our foreign exchange experts on +44 (0) 20 7738 0777 and we will be happy to assist you where possible. We will also continue to update our customers regarding any changes to the UK’s relationship with the EU in terms of financial services and more specifically international payments.
Posted in Business Resources on Feb 12 2021