What Barclaycard customers need to know about our Brexit preparations

What Barclaycard customers need to know about our Brexit preparations

Mon Nov 19 2018

Following the triggering of Article 50 by Theresa May in March 2017, the UK is due to leave the European Union on 29 March 2019. The future relationship between the UK and the EU after this date currently remains unclear. But at Barclaycard, we’ve been considering all the possible outcomes of the Brexit negotiations to make sure we can continue to provide all our services to all our customers in the UK and Europe.

As a result, Barclaycard Payment Solutions are busy preparing for the possibility of a ‘hard Brexit’ where the UK also leaves the European Economic Area (EEA).

Over the coming months, we’ll continue to serve all our merchants as normal whatever the outcome of the Brexit negotiations. In this article we give an overview of our own approach to Brexit, and to find out more about the Brexit negotiations you can read this article published by Barclays Corporate Bank.

Our approach to Brexit

For many years, all of our UK and other EU merchants have been contracted to, and served by, Barclays Bank PLC (BBPLC). What this means, is:

Authorised payments: If the UK leaves both the EU Single Market and the Customs Union, a ‘hard Brexit’, Barclaycard will need to use an EU-authorised payment company to serve our EEA-registered customers.

Passporting rights: We currently serve our non-UK merchants by using our passport rights under EU law. If there are changes to these current ‘passporting’ rights, these EU laws could be revoked and mean that, as a UK-based business, we’re not able to do business across the EU without the individual authorisation of each member state.

International payments: To help us avoid this scenario, we’ve set up Barclaycard International Payments Ltd (BIPL) in Ireland to serve as the acquirer for our customers whose legal entity is based within the EEA. 

As a result, Barclaycard is well prepared for a ‘hard Brexit’ and a loss of ‘passporting’. Barclaycard is planning to implement its solution by March 2019. 

Our strategy

Based on the location of your business’ legal entity, you’ll need to be aware of the following: 

For UK entities: You don’t need to do anything – there will be no change and Barclaycard will continue to provide all payment services through BBPLC. 

For EEA entities: We’ll need to make arrangements to change your supplier: from Barclays Bank PLC (BBPLC) to Barclaycard International Payments Ltd (BIPL) before 29 March 2019.

If you fall into this latter category, we’ll send you an amendment to your contract. It’ll reflect any change in the legal entity providing services to customers with appropriate prior notice.

Barclaycard doesn’t intend to give such contractual amendments effect unless and until required. Our plan is to deal with this as smoothly as possible with minimal disruption to your business.

There may also be some changes required to the setup of your account, but we’ll advise you of those in due course.

The broader impact of Brexit 

Having set out Barclaycard’s strategy over the coming months, we’ll now look at the background and wider aspects of what’s expected to happen with Brexit.

Transition period

A transition or implementation period will begin after the UK leaves the EU in March 2019, and end 31 December 2020. That’s a little shorter than the two-year period the Prime Minister proposed in her speech in Florence in September 2017. 

The transition period is designed to give the UK time to introduce a new immigration system. This would mean that businesses will only have to plan for one set of changes in the nature of the relationship between the UK and the EU.

The implementation period will see trade continue on ‘current terms’ – in other words, the UK would not leave the Single Market or Customs Union until the end of this period. However, the UK will be able to sign and ratify its own trade deals – including the future trade agreement with the EU.

The EU explained that the UK will have to continue to adhere to all existing EU regulations during this period, including the ‘four freedoms’ of movement of goods, capital, services and people. 

Future relationship 

Phase two of the negotiations started in March 2018 and is expected to end by the autumn. 

However, any future relationship between the UK and the EU cannot be formally agreed until the UK ceases to be a member of the Union in March 2019.

The EU has indicated that the UK can expect similar access as that available to other countries, based on what it wants. 

If the UK is seeking membership of the Single Market, it could gain the same kind of access that Norway has.

If the UK wants a free-trade agreement and to have an independent trade policy, it could gain the same kind of access that Canada has.

If the UK wants bilateral relationships with different EU member states, it could gain the same kind of access that Switzerland has.

The above is based on a desire to respect EU directives on the Single Market and Customs Union. 

The UK has set out its two preferred options:

A customs partnership where the UK would mirror the EU’s tariffs and rules of origin on goods or services arriving in the UK and intended for the EU. However, there would be a mechanism for the UK to be able to apply its own tariffs on goods intended only for the UK.

A ‘highly streamlined’ customs arrangement. This would see goods able to travel across UK/EU borders without a requirement for customs declarations, partly by mutual recognition of trusted trader schemes. 

 Read more analysis of the government and EU positions on the future relationship. 

July White Paper – the fallout

The UK articulated what it sees as the fundamental building blocks of the future relationship when Theresa May gathered her Cabinet at Chequers to force a common position upon it. 

As such, the Chequers proposals and subsequent White Paper mark a ‘softer’ Brexit stance by the government than previously set out. In terms of the actual White Paper, the paper states that, at the topline level: 

the UK will maintain a ‘common rulebook’ for goods, including agri-food, which covers only those rules necessary to provide for frictionless trade at the border

a treaty will be signed committing the UK to ‘continued harmonisation’ with EU rules – avoiding friction at the UK – EU border, including the border with Northern Ireland

parliament will have the ability to ‘choose’ to diverge from the EU rules, recognising there could be proportionate implications for the operation of the future relationship where the UK and the EU had a common rulebook

there will be different arrangements for services, with greater regulatory flexibility – in particular, the UK proposes new economic and regulatory arrangements for financial services, preserving the mutual benefits of integrated markets and protecting financial stability while respecting the right of the UK and the EU to control access to their own markets

a ‘joint institutional framework’ will be established to interpret UK – EU agreements

the European Court of Justice will no longer have jurisdiction in the UK – but UK courts will have to pay ‘due regard’ to EU case law in areas of complete alignment with EU rules

the borders between the UK and EU will be treated as a ‘combined customs territory’ which would enable the UK to control its own tariffs for trade with the rest of the world and ensure businesses paid the right or no tariff

the free movement of people between the UK and the EU will end and a ‘mobility framework’ will be set up to allow UK and EU citizens to travel to each other’s territories 

What’s next?

Most of our customers will not be impacted by our Brexit plans as they’re already contracted to a Barclaycard entity that is legally allowed to provide them with services after Brexit. 

Those affected will be contracted to a different Barclaycard entity. We believe any other effects from the changeover will be minimal.

At present you don’t have to do anything, but please look out for our further updates and details of the changes to your contract over the next few months. 

Need more information?

If you have any questions about these changes, please get in touch with your Barclaycard account manager.

In addition, to help with our preparations, we encourage you to review what Brexit may mean for your payment processing needs, regardless of where your corporate HQ is located, and let your account manager know of any areas of concern. We’re here to support with any changes that may be required. 

 

 

 

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