While it's difficult to understand the full impact of Brexit at this time, please be assured that GoCardless is taking steps to prepare. We will continue to be able to process payments across the Eurozone after Brexit, as we are working to secure the licenses needed to continue to operate within the EU and taking other steps to make any necessary Brexit transitions with a minimum of disruption for our merchants, partners and payers.
What do these terms mean?
There's a lot of jargon involved in Brexit - soft Brexit, hard Brexit, transition period. When we use these terms, here's how we've interpreted them:
Soft Brexit: In practice, a soft Brexit means staying within both the EU’s single market and its customs union. The UK will be bound by EU rules and tariffs even though the UK will lose any say in making them.
No deal/hard Brexit: If the UK fails to negotiate a deal with the EU that sets out how it will work with the EU post-29 March, or if the Article 50 negotiations on leaving the EU break down, then it will leave with "no deal" on the table. If this happens, the UK will have no immediate relationship with the EU and will need to fall back on other mechanisms dealing with trade etc., such as its membership of the World Trade Organisation (WTO). In this situation, ‘passporting’, which allows GC to provide its financial services in the EU, would also come to an end.
Transition period: This is the proposed period of 29 March 2019, to 31 December 2020, which, if agreed, will be a period during which the UK effectively remains in the EU, and provides time to get everything in place for a neat withdrawal and allow businesses and others to prepare for the moment when the new post-Brexit rules between the UK and the EU begin. The UK will be able to strike its own trade deals - although they won't be able to come into force until 1 January 2021.
Frequently asked questions
What are the potential impacts of Brexit for GoCardless?
GoCardless is authorised in the UK by the FCA as an Payment Institution and has permissions to passport into Europe.
Recent movement indicates there may be an agreement reached with the EU by the end of November. This would likely include a transition period lasting until at least December 2020. This means that GoCardless would be able to continue to rely on its FCA licence to process payments, as EU law would still be applicable in the UK, so passporting would continue.
If there is a hard Brexit with no transition period, GoCardless has an existing entity in France, which will become our legal entity for serving merchants within the European Economic Area (EEA). This will mean minimal disruption for our merchants. We will contact merchants in advance of any possible contractual amendments or restructuring that reflect our french entity providing services in the EEA.
Will my service be impacted as a result of Brexit?
No - we do not envisage any negative impact on processing time frames. GoCardless is working towards ensuring that there is minimal disruptions for merchants, partners and payers.
What does Brexit mean for SEPA users in the UK?
GoCardless provides you with the ability to collect payments from the Single Euro Payments Area (SEPA), through the SEPA Direct Debit scheme. SEPA currently includes the 28 EU member states, and a number of non-EU countries and territories like Norway.
On 7 March, the European Payments Council (EPC) ruled that the UK can remain in the bloc’s Single Euro Payments Area (SEPA), regardless of the outcome of Brexit.
For GoCardless customers who use the SEPA scheme, this means no change to service – we’ll continue to process SEPA payments for you as usual.
Will the credit identifier (CID) change from a GB one to an FR one?
A Creditor Identifier is a unique reference which identifies each SEPA Direct Debit originator. The structure of the Creditor Identifier has been standardised throughout the SEPA). It is made up of the respective ISO country code, a check digit comprising 2 characters, the Creditor Business Code and a country-specific part, called the national identifier, which may vary in length but must not exceed 28 characters. The length and format of the Creditor Identifier therefore differs from country to country. We’re working closely with our sponsor bank to understand any potential impact on CIDs and will keep all our merchants updated if changes will occur.
How is GoCardless managing Brexit's impact on GDPR?
GDPR is in effect in the UK now and will continue to be until a replacement law is passed. At a minimum, GDPR will apply post-transition to data processed during the transition. There’s still great uncertainty about how Brexit will impact data transfers between the EU and the UK after transition. We are making plans now to ensure the continued transfer of data between the UK and the EU. We are keeping a close eye on this issue and taking steps to ensure that our operations in the UK and the EU can continue seamlessly whatever the data transfer position.