"On a scale of 1 to 10, this is going to create chaos at level 9": the mood across the payments industry is not a positive one after the momentous UK referendum on whether to remain in the EU or leave it, which ended in favour of Brexit on 23 June. Anna Milne rounds up soundbites from the industry
The most prominent concerns were for the payments fintech industry that has been built up in the UK over the last decade and the e-money issuing business which is so prominent in the UK. A combination of regulatory benefits and a concentrated talent pool as well as significant government investment has made the UK, and London specifically, a major draw for international companies and start-ups.
Carlos Sanchez, CEO ipagoo, Orwell Group:
"So much was achieved by the UK regulators and government attracting investment, talent and the most daring entrepreneurs. I don't know what will happen in detail, but most of it will move away for sure.
"I am actually in shock; it's hard to describe. A mix of concerns about my business, the industry, and also about peace and stability in the EU."
"The movement of money and the passporting system is the cause for particular concern."
David Parker, CEO, Polymath Consulting:
"On a scale of one to 10 this is going to create chaos at level nine in the Financial Services and e-money sectors for the next 12-20 months, due to the lack of uncertainty on so many issues: PSD2, e-money, passporting, cross-border issuing, the list goes on.
"The vote raises a large number of questions ranging from the implementation of PSD2, through to passporting, e-money licences and faster payments within Europe.
"The UK issues the most prepaid cross-border cards in Europe, a huge proportion; if they are suddenly only valid for the UK, that has a profound effect.
"I'm not worried about the fintech industry, the main concern is around prepaid and e-money licences. The challenge for e-money now is 'where next?', given so much current regulation coming in is based on the broad EU area.
"Particularly given the UK is the leading issuer of e-money licences and the largest issuer of prepaid cards, what impact will this have?"
Tom Hay, head of payments, Icon Solutions
"I'm surprised that the British public decided to leave the EU despite advice and guidance by the majority of the business community. Sterling’s reaction was predictable given warnings from the Treasury re Brexit.
"As for the impact on UK Payments- it will not be dramatic, since Britain was never part of the Euro, hence never fully participating in SEPA. The innovation and leadership of the UK Fintech community will continue, but like other businesses it may be more difficult to co-operate with mainland European partners. The trend towards globalisation means payments are already a global business, so UK Fintech will continue to innovate and co-operate with other countries around the globe. One of the possible benefits however, is that it should make it easier to attract talent from outside the UK to work in the UK Fintech community.
"A repetition of the Norwegian experience is likely, where they enact legislation and regulation compatible with the EU, even though not officially a member."
Craig James, CEO, Neopay:
"e-money and payment services may also be affected, hindering the usual smooth and quick transactions. Will these businesses have to apply for new licences in order to operate? Or will they need to set up a business and gain a licence in a different EU state?
"Given the fact that so many of these businesses are based in the UK, that will be a lot of paperwork, time and money. Currently firms expanding into the UK are gaining access to the largest single market in the world. If this is no longer the case, will the cost of licensing and setting up a frameworks and procedures to meet UK requirements be worth the risk?"
Rajesh Agrawal, founder and chairman of XendPay, business advisor to Sadiq Khan, London Mayor:
"The booming fintech sector has been one of our greatest triumphs since the turn of the millennium, and the UK can rightfully call itself the world leader in this field – and this is no accident. Brexit will endanger the currently booming payments industry. 'Ppassporting'' of EU rules, which allows payments companies authorised in the UK to conduct business across the EU, will no longer be possible [if Brexit occurs]. Payment and money transfer companies will no longer be able to provide services in the EU unless they get a separate EU license via an office abroad, effectively driving down London's appeal to Fintech companies worldwide."
Simon Black, CEO, PPRO Group spoke of the "inevitable exit of the [estimated 500] fintech companies in the UK".
"They will immediately begin forming plans to relocate at least some of their operations, and the majority of new jobs will be outside of the UK. The likely fintech winners would be Amsterdam, Dublin and Luxemburg; all cities that already boast a progressive regulatory environment, significant tax advantages, and international talent pools. Dublin would probably benefit most within Europe: It has a big tech scene, taxes are particularly low with a 12% corporate rate and major FinTech companies such as MasterCard, Apple, PayPal and First Data already have significant operations there providing critical mass."
Free download worth over $5000Download our 2018 Technology, Media and Telecoms Predictions Report
In this report, we look at the 30 big tech themes for 2019, identifying winners and losers for each theme. This report will impact all industries helping:
- CEOs/Senior Staff: in all industries understand the disruptive threats to their competitive landscape
- Investors: Helps fund managers focus their time on the most interesting investment opportunities in global TM