The UK government has warned of higher card payment costs in the European Union (EU) for British shoppers if Britain leaves the bloc without a deal.
The government released a series of documents that outline plans to mitigate any potential troubles and inconveniences arising out of the impending Brexit.
In the event of a no-deal Brexit, the existing surcharging ban that prevents EU businesses from charging UK consumers for using a specific payment method will no longer be applicable.
No-deal Brexit, slower payments
A guidance issued by the government discussed at length all possibilities of the exit and contingency plans. This included the impact on banking, insurance and other financial services and the ways to address the challenges therein.
As per the document, UK-based payment services providers would no longer have direct access to central payments infrastructures, such as TARGET2 and the Single Euro Payments Area (SEPA).
This result, in all likelihood, may result in customers facing higher costs and slower processing times for Euro transactions.
In order to mitigate this issue, the UK government is planning to align payments legislation to maximise its chances of remaining a member of SEPA as a third country.
Through the measure, the amount of time needed to process lower value Euro transactions could remain unchanged.
London and Brussels are working on securing a deal by March next year to ensure a smooth transition.
The document also revealed that UK citizens living in the European Economic Area (EEA) could lose the ability to access existing lending and deposit services, insurance contracts if the EU fails to take necessary action.
The UK government in its statement said: “In the absence of EU action, EEA clients will no longer be able to use the services of UK-based investment banks, and UK-based investment banks may be unable to service existing cross-border contracts.”