Brexit from 1 January 2021 onwards: get ready for the end of the trans...

Brexit from 1 January 2021 onwards: get ready for the end of the transition period

14 July 20

Share This

On 7 March 2019, the published its decision paper on Brexit and United Kingdom’s (UK) payment service providers’ ( ) participation in the payment schemes, approving UK Finance's application for the continued participation of UK in the payment schemes, even in the event of a “no-deal Brexit”, provided that the UK keeps complying with the relevant participation criteria.
 
On 31 January 2020, the UK formally left the European Union ( ) and entered into an 11-month transition period, agreed within the Withdrawal Agreement with the , which will run until 31 December 2020, 11 PM, GMT.

By effects of said transition period, until 31 December 2020 the UK is a non-European Economic Area ( ) country temporarily part of the European single market and customs union, subject to the relevant regulatory framework.

Therefore, as communicated earlier this year during the remainder of the transition period the UK will continue operating within the scope of the payment schemes without any change, due to the fact that existing rules and regulations will continue to apply in the UK. To this extent, between 1 February and 31 December 2020, no new requirement will apply, and no changes will be needed for the Credit Transfer ( ) / Direct Debit ( ) transactions to and from the UK.

However, as of 1 January 2021 as no extension of the transition period was agreed, the UK is set to leave the single market and customs union, either with an -UK deal, negotiated during the transition period, or without it (i.e. "no-deal" Brexit). For clarity, the UK will at that point maintain participation in the geographic scope, however, this important change will make the / rules applicable to transactions from/to non- jurisdictions also applicable to / transactions with the UK. 

The therefore requests all to implement without delay the measures described below, to ensure a continued smooth processing of cross-border payments involving a UK-based payment scheme participant after 31 December 2020. 

transactions to be executed or settled as of 1 January 2021 involving a UK-based payment scheme participant must contain: 

For and Instant Credit Transfer ( ) instructions from the Originator: 

  • The full address details of the Originator. 
  • The BIC code of the Beneficiary Bank when the Originator Bank explicitly requests this data element from the Originator.

For and Business-to-Business (B2B) collection files from the Creditor: 

  • The full address details of the Debtor.
  • The BIC code of the Debtor Bank when the Creditor Bank explicitly requests this data element from the Creditor

The lack of these additional transaction details may lead to rejected transactions or potential other issues from the scheme participant receiving the payment message, i.e. the Beneficiary Bank in case of and instructions and the Debtor Bank in case of collections (or from their respective clearing and settlement partners in the interbank space).

Therefore, the strongly recommends each payment scheme participant to identify as soon as possible its customers with incoming and outgoing cross-border transactions involving both a UK and an payment account, and to inform all customers concerned about the need to provide these extra transaction data as from 1 January 2021 (as execution or settlement date).

payment scheme participants with questions on the above are invited to contact the relevant National Adherence Support Organisation (NASO) or the directly.

In line with the abovementioned Board decision of 7 March 2019, the will regularly monitor the developments of Brexit throughout the transition period and thereafter. 



Your reactions

If you would like to comment on this article, please identify yourself with your first and last name. Your name will appear next to your comment. Email addresses will not be published. Please note that by accessing or contributing to the discussion you agree to abide by the EPC website conditions of use.