SEPA payments with the UK after a no-deal Brexit

According to the European Payments Council (EPC), the United Kingdom will remain part of the Single Euro Payments Area (SEPA) for the time being , including in the event of a no-deal Brexit. Euro credit transfers and direct debits to and from the UK can therefore continue to be processed, subject to a few limited changes.

The EPC, of which the Dutch Payments Association is also a member, manages the SEPA payment schemes SCT (SEPA Credit Transfer), SCT Inst (SEPA Instant Credit Transfer) and SDD (SEPA Direct Debit).

Latest insights for a no-deal Brexit from 1 January 2021

If the UK were to leave the EU single market and customs union without a trade agreement – a no-deal Brexit – it would very likely remain a SEPA participant. The SEPA Rulebook for transactions to and from non-EEA jurisdictions would then apply to SCT and SDD transactions involving the UK.

This mainly concerns rules on additional transaction data for SEPA transactions involving a UK participant. If these additional details are missing, SCT and SDD transactions between the EU and the UK may be rejected from 1 January 2021.

See also the explanations provided by the EPC and the European Banking Authority:

• EPC: operational implications of a no-deal Brexit for SCT and SDD transactions
• EBA: financial institutions must be ready for the end of the Brexit transition period

Earlier EPC statement on Brexit,
after ratification of the Withdrawal Agreement

The United Kingdom and the European Parliament ratified the UK Withdrawal Agreement, clearing the way for the UK to leave the European Union on 31 January 2020. The UK then entered the agreed transition period, which was due to run until 31 December 2020. The European Payments Council therefore clarified the status of UK payment service providers’ participation in SEPA and of SEPA Credit Transfers (SCT) and SEPA Direct Debits (SDD) involving UK payment service providers from 1 February 2020.

Situation between 31 January 2020 and 1 January 2021

The UK left the EU on 31 January 2020, beginning an eleven-month transition period for determining the agreed measures and concluding a future agreement governing relations between the UK and the EU.

During the transition period, which ran until midnight Central European Time on 31 December 2020, the UK was no longer an EU Member State and was a country outside the European Economic Area (EEA). Nevertheless, it remained part of the EU single market and customs union during this period, and the relevant EU regulatory framework continued to apply.

For EPC SEPA payments, the UK continued to operate within the scope of the SEPA schemes, even though it became a non-EEA SEPA country on 1 February 2020. The UK continued to meet the relevant SEPA participation criteria because existing EU regulations remained applicable there.

Between 1 February and 31 December 2020, no new requirements applied and no changes were needed for SCT and SDD transactions to and from the UK. This also applied to practical matters such as charging codes and the handling of anti-money laundering measures, which remained unchanged during this period.

In accordance with the EPC Board’s decision of 7 March 2019 approving the continued participation of UK payment service providers in the SEPA schemes after Brexit, the EPC regularly monitored Brexit developments during the transition period and beyond.