Since the United Kingdom’s withdrawal from the European Union, the financial relationship between the two regions has undergone significant restructuring. While trade continues, cross-border payments have become more complex due to regulatory divergence, data-sharing adjustments, and new fee structures. Businesses operating across both jurisdictions must now adapt to different financial frameworks to maintain efficient and compliant payment operations.
Before Brexit, payments between the UK and EU benefited from full participation in the Single Euro Payments Area (SEPA) and harmonized financial regulation under the Payment Services Directive (PSD2). After leaving the EU, the UK became a “third country,” meaning it no longer falls under EU jurisdiction for payment regulation. However, the UK has retained access to SEPA as a non-EEA member, allowing euro transfers to continue with similar speed and security — but under new administrative and cost conditions.
The UK’s Financial Conduct Authority (FCA) now oversees payment institutions independently from the European Banking Authority. This separation requires financial firms to maintain separate authorizations in each region if they operate in both markets. As a result, many banks and fintech companies have set up parallel entities — one in the UK and one in an EU member state — to preserve seamless cross-border operations.
For businesses, this shift has introduced several practical differences. SEPA transfers between the UK and EU still function, but some banks have reclassified the UK as an “international” zone, resulting in extra transaction fees or longer settlement times. The reason is partly technical — some EU banks require additional data verification for payments to non-EEA accounts, such as confirming IBAN structure and validating BIC codes.
Currency conversion is another key factor. While SEPA covers euro-denominated transactions, many UK payments are conducted in pound sterling (GBP). Post-Brexit, FX conversions often involve intermediary banks, increasing costs. Businesses that maintain both GBP and EUR accounts — either through multicurrency accounts or by establishing operations in both regions — can reduce conversion risk and optimize liquidity management.
Regulatory compliance has also changed. Under PSD2, the EU continues to enforce strong customer authentication (SCA) and open banking standards. The UK has retained similar principles under its domestic Payment Services Regulations 2017, but divergence is expected over time. Companies managing cross-border payments must ensure that their payment providers comply with both regimes, especially when processing sensitive customer data under GDPR and the UK’s Data Protection Act (DPA).
The Bank of England and the European Central Bank (ECB) have both implemented mechanisms to ensure financial stability in the post-Brexit era. The UK’s CHAPS system remains the main infrastructure for high-value sterling payments, while SEPA and TARGET2/TIPS continue to handle euro transactions within the EU. Some institutions now use intermediary fintech networks that support both currencies, reducing friction and settlement delays.
Fintech innovation has played a major role in mitigating Brexit-related payment disruption. Platforms such as Wise, Revolut Business, and Currencycloud allow companies to hold balances in multiple currencies and perform transfers between the UK and EU with near-instant processing. These fintechs operate under dual licenses, complying with FCA and EU regulatory standards simultaneously. For many SMEs, they have become a cost-effective alternative to traditional bank wires.
From a compliance perspective, businesses must also adapt to updated tax and trade documentation rules. Payments related to goods and services across the UK–EU border now require customs declarations and VAT registration alignment. Banks and payment processors often request these details to verify the purpose of cross-border transactions, particularly for large or recurring transfers.
To maintain efficiency in the post-Brexit environment, companies should:
– Verify that their banking partners or fintech providers hold licenses in both the UK and EU.
– Use SEPA for euro payments to minimize fees and settlement times.
– Maintain multicurrency accounts to avoid unnecessary conversions.
– Ensure compliance with both GDPR and UK DPA for data handling.
– Keep all invoices and customs documents consistent with payment details.
Despite new challenges, UK–EU payments remain highly functional. Both sides have a strong incentive to keep financial connections stable due to their deep trade relationship. As technology continues to evolve, interoperability between British and European systems will likely increase, supported by private fintech initiatives and regulatory cooperation.
Brexit has not disrupted the fundamental ability to send or receive money between the regions — it has simply added a layer of complexity that demands attention to detail. Businesses that adapt by leveraging digital platforms, maintaining dual banking relationships, and staying compliant with evolving rules can continue to move funds across the Channel as efficiently as before.