The United Kingdom left the European Union on January 31, 2020, but has not yet terminated all ties. January 1, 2021 is the final date, marking the end of the transition period, and the new rules of the transaction framework between the UK and the EEA will take effect or become invalid. Marius Galdikas, CEO of ConnectPay, He shared his views on how the current situation affects the behavior of UK market participants.
Online banking service provider ConnectPay has worked closely with some British companies. Marius Galdikas, Managing Director of ConnectPay, said his partners are from The UK has begun to establish entities abroad to comply with the EU regulatory framework.This and the monitoring of new payment rules The Single Euro Payments Area (SEPA) indicates that the country intends to maintain close ties with the EU market.
Although the final deadline for EU exports is just around the corner, the post-crisis trade agreement is still far from reaching a consensus. This imminent uncertainty puts British resident companies in a difficult situation, raising the issue of how to resolve the newly established barriers and how to continue doing business with EU partners.
“With the end of the transition period, we have witnessed many partners establishing entities in Ireland and continental Europe. I think the biggest driving force is the opportunity to maintain licenses within the EU, and the opportunity to ease the divergence between anti-money laundering and regulatory requirements (if they start to diverge).“,Explanation Galdicas. “Another thing is that since the UK will have to renegotiate the trade agreement, the result may translate into additional costs for the company.Therefore, establishing and signing agreements with European Union entities will provide more security and all of us can continue as always“He added.
Exports have sparked discussions about the future of payments in the Euro Single Payment Area (ZUPE). Companies have brought the speed of all cross-border transactions with SEPA, and it seems that as long as they apply current rules to financial institutions, they can continue to use SEPA services provided by EU financial institutions (FI). -EEA transactions make SEPA credit transfer (SCT) and SEPA direct debit (SDD) payments within the UK.
Minor interruptions in SEPA payment processing are inevitable, and the Bank of England has warned British financial institutions, “Continue to take measures to minimize interferenceGaldikas agreed and pointed out that non-UK financial institutions, including their own financial institutions, have already taken appropriate action on the matter.
“From a technical point of view, we have established a system for non-EEA SEPA members (such as Switzerland) to require us to provide the debtor’s address details. Therefore, with the arrival of January 1, we will only press a switch to Activate the same payment requirements to and from the UK“He added.
At the moment, the chances of reaching an agreement seem trivial: Cabinet Minister Michael Gove announced that the probability of reaching an agreement is less than 50%. As it cannot be determined before midnight on December 31, it is reassuring that the financial institutions on both sides have taken steps to ensure that the transition is as smooth as possible.
“For everyone, this is undoubtedly a stressful period. Having said that, fintech companies are no strangers to sudden changes in the market, so we look forward to continuing to work with British companies and do everything possible to help them enter the post-Brexit framework.“.