Will Your UK-issued Card Still Work In The EEA After Brexit?

Some confusion arising around this question today. The answer is that it should not be an issue, based on how card acquiring really works.

The EU has been clear since 2016 that, regardless of which type of Brexit occurs, UK-based financial institutions will no longer benefit from the ability to 'passport' their services into the rest of the European Economic Area (Norway, Liechtenstein and Iceland also participate in the financial services passporting arrangements). This position was emphasised in the relevant EU 'preparedness notice' in February 2018.

In the payments space about 350 UK firms rely on outbound passports around the rest of the EEA, while 142 EEA-based firms passport into the UK, as the FCA explained to Parliamentary select committee in August 2016.

More recently, the UK has said it will give the EEA-based firms a three year transition period to figure out how to continue serving the UK market.

So, in the payments space, the 350 UK-based banks, e-money institutions and payment institutions who currently rely on passports have been setting up additional new entities based in one of the remaining EU27 countries, from which they will service their customers who are resident in the EEA (as have I, on a professional basis, as UK professional qualifications will also cease to be recognised for providing services in the EEA). 

So, when Brexit occurs, the current residents of other EEA countries will be offered payment cards and accounts from an EEA-based entity, rather than a UK one.

That is not to say that a UK resident travelling in the EEA will not be able to make a payment using their payment cards issued to them in the UK under the typical international card schemes (which actually don't base their definition of Europe according to EEA and non-EEA distinctions, anyway). 

So, EEA-based merchants/retailers will still be able to take payment via their EEA-based payment provider (known as a 'card acquirer' or 'merchant acquirer'); and the UK customer will pay their UK card issuer as usual. The card scheme operator will still net-off amounts owed between EEA and non-EEA based issuers and acquirers and they will settle the difference with the schemes. It's just that the UK issuer in this example will then be among the non-EEA group.