As the possibility of a ‘no-deal’ Brexit looms ever closer, UK businesses, particularly in the hospitality sector, face a period of uncertainty. Key among the potential changes is the forecasted rise in the cost of card payments for transactions from the EU, a development that could place a significant financial strain on hotels, restaurants, and other businesses that heavily rely on international tourists and customers.
Brexit’s Effect on Card Payments
Under a ‘no-deal’ Brexit scenario, the UK government predicts an increase in card processing fees for payments originating from the EU. This could lead to unexpected additional costs for businesses like food importers and hospitality service providers such as hotels, pubs, and restaurants. The situation becomes even more concerning with potential cost implications for establishments near universities that cater to international students from the EU.
The ’No-Deal’ Brexit Scenario: A Growing Possibility
As March 2019 approaches, the likelihood of a ‘no-deal’ Brexit continues to grow. Highlighting this, the UK government has released planning papers for such a scenario, which state, “The cost of card payments between the UK and EU will likely increase, and these cross-border payments will no longer be covered by the surcharging ban, which currently prevents businesses from charging consumers for using a specific payment method.”
The government, however, has not yet provided clear specifics on how much the card payment costs are expected to increase. One clear implication is that the cost of processing payments from EU cards could rise, spelling bad news for the hotel and hospitality sector. With profit margins potentially taking a hit, it is crucial for these businesses to assess the possible impact on their operations.
Securing Merchant Costs Before Brexit
The exact impact of a ‘no-deal’ Brexit on card payments remains unclear as the UK prepares to exit the EU. To mitigate potential challenges, we at Unyfi recommend evaluating your current merchant costs before March 2019. Taking a proactive approach can help ensure that your business remains in a strong financial position, irrespective of the eventual Brexit outcome.