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It’s been nearly three years since Brexit moved from a political conundrum into a real-world dynamic. When we read articles back from the 31st of January 2020, the predictions for what would happen were as wide and as varied as when the vote occurred back in 2016.  

Now we have a bit of distance and some hard evidence to look at; how has Brexit impacted the international payments space? How have businesses adapted to the new circumstances, and what has the impact of those changed circumstances been?  

4 ways Brexit has impacted international payments 

  1. Increased and changing regulations  
Leaving the EU single market has left businesses on either side of the divide faced with more paperwork
Leaving the EU single market has left businesses on either side of the divide faced with more paperwork

If the phrase ‘red tape’ wasn’t the Oxford dictionaries’ word of the year at least once since 2016, the editors missed a trick. It was a constant banner headline, with countless examples from businesses of all sizes having to wade through a whole plethora of new rules and regulations.  

This has hit British businesses particularly hard, and particularly those small and medium businesses that didn’t have the capacity or expertise to create new trade channels.  

Businesses were forced to adjust their payment processes to accommodate new banking regulations, while new taxes and tariffs were being imposed on imports and exports, further complicating international payments. 

Despite some posturing in the media, the EU and UK policymakers have generally remained keen to find solutions to removing frictions in trade. A common solution has been for the UK to build a ‘mirror’ of the infrastructure required to trade as an EU member. In other words, they’ve recreated UK versions of the EU rules they were following pre-Brexit. While this infrastructure costs the UK to both build and run, it does help businesses looking to trade into the respective regions.  

The bottom line is that increased regulations and complexity make international payments more costly and time-consuming. Businesses have had to adjust their payment processes to accommodate the new regulations, while also having to invest in technology to ensure their payment processes are secure and efficient. 

  1. Introduction of taxes and tariffs 
Increased taxes and tariffs was an inevitable outcome of Brexit
Increased taxes and tariffs was an inevitable outcome of Brexit

Hot on the heels of increased regulations was the introduction of taxes and tariffs. When the UK was in Europe, goods could be freely traded between member states. That came to a grinding halt.  

With the introduction of taxes and tariffs on imports and exports, goods have become more expensive, and businesses have had to absorb the costs. Sometimes it has been prohibitively high and, combined with the extra red tape, trade has fallen dramatically.  

A study carried out in 2021 analysing trade between the EU and the UK estimates that Brexit reduced trade by close to 20% in both directions. 

For UK businesses, this is a global problem. Since Brexit, the UK has signed trade deals and agreements in principle with 71 countries as well as the EU. However, these agreements mostly use that ‘mirror’ principle of copying previous trade deals the UK had with these countries while in the EU.  

At best then, in cases where agreements have been made, UK businesses have yet to benefit from the ability of the UK to negotiate individual trade deals. What’s more, an agreement with the US still looks like a distant prospect.  

The effect of all this is to potentially increase costs of trade (and therefore international payments) in those countries without agreements, without receiving any benefits in those ‘rollover’ agreements.  

  1. Economic volatility  
Volatility has been a consistent feature of the UK's economy since Brexit
Volatility has been a consistent feature of the UK’s economy since Brexit

While a direct political line can certainly be drawn from the Brexit vote to the government of Liz Truss and Kwasi Kwarteng, their economic policies were not a direct result of Brexit itself. Those policies were, however, in pretty much everyone’s eyes, disastrous.  

While that September to October period of her government was the most headline-grabbing period of economic volatility, the UK hasn’t had much respite in that regard since 2016.  

The UK’s decision to leave the European Union has undoubtedly created volatility and uncertainty in exchange rates.  

In June 2016, the month of the Brexit vote, the British pound was 1.43 against the dollar. Today, it stands at 1.23. This has made imports from the US more expensive, while exports from the UK have become more attractive. Hedging against these fluctuations, and planning for them, is again a difficult (and potentially costly) proposition for most businesses.  

As a result, businesses that rely on international payments have had to adjust their foreign exchange strategy to minimise their exposure to currency risk. While the coin has two sides, stability is usually the path most business leaders would choose.  

  1. SEPA, IBAN discrimination and increasing payment transaction fees  
The UK remaining in SEPA should prevent IBAN discrimination

One of the wins in the post-Brexit payments landscape is the UK remaining in the SEPA (Single Euro Payments Area). SEPA transactions allow customers to make quick and inexpensive cashless euro payments to anywhere in the EU, plus Iceland, Norway, Liechtenstein, Switzerland, Monaco, San Marino – and the UK. 

Unfortunately, there have been several cases where some companies refuse SEPA payments and direct debits from UK IBAN accounts. This is illegal and should be reported.  

Despite remaining in SEPA, there have been extensive reports from UK businesses stating that international payments have become more expensive. J.P. Morgan found that ‘some European banks now treat SEPA transactions between the UK and Europe as cross-border from a fee perspective, resulting in additional bank charges’. Another report found that ‘the UK is no longer covered by EU regulation limiting interchange fees, which has led to some card acquirers increasing fees that EU merchants must pay when receiving orders from the UK.’ 

Reasons for optimism 

Brexit has not been easy for businesses. It’s complicated international payments, added costs in many areas, and increased economic volatility.  

There are though, reasons for optimism.  

Calmer heads have generally prevailed within the trade negotiation teams in all respective parties. The policy of ‘copy and pasting’ previous trade deals, infrastructures, and processes has allowed businesses to keep trading in a relatively stable manner in a lot of cases.  

The grand promise of Brexiters – that increased sovereignty will allow for more bespoke and beneficial trade deals – has not come to pass, but there is logic in the claim. Successful countries have chosen that path. The issue right now is that path takes a long time to build and is usually built organically – not in the hot fires of political debate and economic stability. 

The problem when it comes to increased sovereignty and international payments is that generally the more jurisdictions a payment goes through the more complex, more expensive, and slower they are.

A final reason for optimism is the increasingly positive impact advanced payment technology is having on world trade. Businesses can access new payment infrastructures to speed up international payments, lower their costs, increase transparency for all trading parties, and do it all in a secure, regulated environment.  

While the three years that have passed since Brexit came into being have been tumultuous, and the road ahead looks long and pretty bumpy in places, there is at least a road with most people agreeing on the destination – allowing businesses to trade freely across the globe.   

Contact our team now to discover how your business can leverage TransferMate’s technology, reduce costs with an extensive global payments network, and speed up international transfers, all in a fully regulated environment. 


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