Brexit’s impact on the UK’s mobile payment industry

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Smartphone penetration in the UK is over 78 per cent. As Brits are increasingly using their mobile phone to make payments on a daily basis, the UK mobile payment industry is predicted to grow strongly in the next five years as shoppers embrace new options and spend more on mobile. Increasing embrace for digital payments, signals shoppers’ growing comfort with new methods to pay as they become more widely available, easier to use and better understood. However, with the British decision to leave the European Union (EU) after the shocked result of the referendum, what does it mean for the mobile payment industry in the country? 

The Bank of England, Britain’s central bank, has suggested a directive of 2018 as the earliest year of formal exit of UK from EU. The mobile payment market is expected to witness relative impact based on the range of Brexit scenarios adopted over period of time. However, immediate impact could be faced by the UK based FinTech startups that could lose access to European markets. Prior to Brexit, requirements for obtaining a license to conduct payment services were uniform across the EU, and it was comparatively easier to authorize such a license from one EU country to another. Absence of separate licenses, thus could possibly hinder European or global ambitions of UK-based providers of e-money services such as wallet providers.

Britain’s exit from European Union also has the possibility of disrupting future digital payment rules associated with Payment Service Directive (PSD) that established standardization and market norms for payment services and competition within the payments market across Europe. Prior to Brexit, London provided mainstream financial providers to start-ups to tech companies a critical mass of digital platform opportunities, fintech talent and funds. Over the period it is to be observed if London sustains its position over its European counterparts as a new center of significance for startups, owing to its clear support to open API (Application Programming Interface) that fosters open banking.

PayNXT360 believes that owing to the disturbed European operations, banks in the UK banks might suffer decline in profits. This might affect the state of mobile payment scenario in London as they are often supported by banks at some level.

To know more and gain deeper understanding of mobile payment industry in the UK, click here.