Brexit did not leave UK businesses under one unchanged cross-border payments regime. The EU Cross-Border Payments Regulation began as Regulation (EC) 924/2009 and was amended by Regulation 2019/518; the UK onshored the regulation, with changes taking effect on 1 January 2021. Since then, the UK regime has retained transparency requirements for currency-conversion charges, while Regulation (EU) 2019/518 no longer applies directly to UK-based businesses. That distinction is central to post-Brexit cross-border payment compliance for UK businesses.
If you handle payments between the UK and Europe, it’s understandable to expect familiar systems to operate under familiar rules. The reality is more nuanced: the UK remains part of SEPA, but UK-EEA payments are no longer treated as intra-EEA payments, and payment instructions may require different information. This article explains what the rules cover, how Brexit changed the UK’s obligations, and what SEPA, SWIFT and correspondent banking mean for payment processing. You’ll get a practical framework for understanding the rules relevant to your business and the operational choices they shape.
Key Takeaways
Separate the UK’s onshored payment rules from EU rules that no longer apply directly to UK businesses.- Understand which payer and payee details may be required for UK-EEA transfers, and why missing information can affect processing.
- Distinguish SEPA euro credit transfers and direct debits from SWIFT payments, including how Brexit changed the UK’s position in the payments landscape.
- See how correspondent banking can shape the route and processing of international payments.
- In this guide, Alexander Legoshin explains how Gemba’s embedded banking and payment offerings can support businesses building branded financial services.
Table of Contents
- What is the Cross-Border Payments Regulation?
- End of UK-EU financial services passporting
- What’s the difference between SEPA and SWIFT payments?
- Correspondent banking and payment processing
- Post-Brexit application of EU payment rules to UK businesses
- Gemba: Fast time to market embedded banking
What is the Cross-Border Payments Regulation?
The EU Cross-Border Payments Regulation began as Regulation (EC) 924/2009 and was amended by Regulation 2019/518. The UK onshored the regime, with changes taking effect on 1 January 2021.
For UK businesses, the practical distinction is between information required for transfers and transparency about currency conversion. The Funds Transfer Regulation governs information accompanying certain payments, while the UK Cross-Border Payments Regulation retains currency-conversion disclosure requirements.
Funds Transfer Regulation Information Requirements
The Funds Transfer Regulation requires certain transfers to include payment information so institutions can identify the payer and payee. Under the UK-onshored Funds Transfer Regulations, payer and payee name and address information must be included when either party is outside the UK or Gibraltar.
Cross-border payments may require identifying information about the payer and payee. Beneficiary information must include the payee’s name and account number, or a unique transaction identification number. These details give payment providers the identifying information needed to process the transfer.
Payment Data Protection and International Transfers
Data protection rules govern how providers process personal information, while international-transfer rules apply when that information crosses borders. After Brexit, providers handling payer and payee details must consider both sets of obligations.
The rules address different questions: the Funds Transfer Regulation specifies the information required in payment messages, while data protection rules govern how personal data is handled and transferred. For example, an instruction may require a payer’s full name and address, but that does not make every additional personal detail necessary. Clear data flows help financial institutions distinguish required payment information from other personal data.
Cross-Border Payment Challenges
Cross-border payment challenges include cost, processing time, access and transparency. A cross-border payment can cost up to 10 times more than a similar domestic payment, and processing can take several days.
For currency conversion, UK payment service providers must disclose charges before a payment is initiated as a percentage markup over euro foreign-exchange reference rates issued by the European Central Bank. The stated markup is 2.5%. However, application of these transparency requirements to transactions initiated by third-party payment initiation services remains uncertain. That distinction matters when a business designs payment journeys and customer disclosures.
Risk-Based Handling of Incomplete Transfers
Article 8 of the Fund Transfer Regulation requires payment service providers to maintain effective, risk-based procedures for transfers missing required payer or payee information. A missing name or address therefore requires more than a routine data correction.
Procedures should help institutions assess what information is missing, the payment context and the associated risk. They must support decisions to execute, reject or suspend a transfer while applying required risk-based controls. For businesses, accurate payment data at the instruction stage helps reduce avoidable exceptions and supports consistent processing of domestic and international transactions.
Alexander Legoshin’s guide examines how these regulatory requirements shape payment operations. The key distinction is between information that must accompany a transfer and personal data that needs appropriate protection throughout processing.
End of UK-EU financial services passporting
UK firms lost access to the EU and EEA institutional frameworks at the end of the Brexit transition period on 31 December 2020. From 1 January 2021, UK-authorised institutions could no longer serve EU customers cross-border through passporting without relevant authorisation.
UK Payment Provider Obligations
UK payment service providers had to prepare for changes affecting payment information and processing across the UK-EEA boundary. During the Brexit implementation period, the FCA and PRA advised providers to address information gaps that could affect cross-border payments.
That preparation mattered because payment instructions and provider arrangements had to work under the post-transition framework. For a business paying between the UK and an EEA country, operational readiness means knowing which provider processes the payment and whether the required information can accompany it.
Financial Services Authorisations
Authorisation is permission from the relevant authority to provide a financial service in its jurisdiction. After passporting ended, UK firms serving EU-based customers needed authorisation from EU competent authorities to continue providing those services.
The EBA advised large corporate and institutional customers to ask UK-based providers whether they held the authorisations needed to continue serving EU customers. The risk is relying on passporting after it ended: UK authorisation alone no longer enabled firms to provide cross-border services to EU customers. The consequences depend on the service and jurisdiction, so distinguish permission to operate from the mechanics of making a payment.
Serving EEA Customers from the UK
Serving EEA customers from the UK raises a jurisdictional question as well as a banking one. A UK firm must consider whether its provider has the authorisations needed for the financial service supplied to an EU-based customer.
The EBA also urged institutions affected by Brexit to implement contingency plans and establish themselves in the EU in line with plans agreed with competent authorities. For corporate customers, this means assessing service continuity separately from payment routing. A transfer may still have a workable route, while the underlying account or other financial service requires separate authorisation.
Anti-Money Laundering and Customer Checks
UK businesses must consider the Money Laundering Regulations 2017 when detecting and preventing suspicious activity. For international payments, KYC checks help establish who is involved, while sanctions screening should sit alongside AML review as a distinct payment-control step.
These controls matter because customer identity, payment parties and transaction context inform the assessment of suspicious activity. The rules cited here do not establish a specific penalty amount for every failure; businesses should treat incomplete checks and unauthorised service as separate compliance risks. Alexander Legoshin’s guide places those responsibilities within the wider post-Brexit framework. Firms redesigning payment operations can explore cross-border payment infrastructure as part of that operational planning.
What’s the difference between SEPA and SWIFT payments?
SEPA is a payment scheme for euro credit transfers and direct debits. SWIFT is a network that financial institutions use to communicate payment instructions. For UK businesses, this distinction helps determine which arrangements suit a transaction, but SEPA access does not mean UK banks retain their former euro-clearing status.
SEPA Access and Payment Efficiency
The Single Euro Payments Area (SEPA) enables euro payments between European Economic Area member states and certain non-EEA countries that meet its access conditions. Its rules cover euro credit transfers and direct debits, not card payments.
SEPA provides common arrangements for eligible euro transactions, but it doesn’t make every UK-to-Europe payment equivalent to a domestic transfer. Some European banks treat transfers involving the UK as cross-border when calculating fees, so the receiving bank’s approach can affect the total cost.
SEPA access depends on participation in the scheme, not simply on whether a business has a UK bank account. UK payment service providers can continue to participate in the European Payments Council’s SEPA Credit Transfer and Direct Debit schemes if the UK meets the relevant participation criteria.
That distinction matters when planning payments. A business paying a supplier in an EEA country in euros may be able to use a SEPA credit transfer, but card payments fall outside SEPA’s rules. The transaction type and currency determine whether the SEPA framework applies.
UK Access to Euro Clearing
Euro clearing is the process through which participating financial institutions settle payment instructions. Before Brexit, some UK-domiciled banks had directly addressable participant status in the euro clearing system.
After Brexit, those banks lost that status because it was available only to entities based in the European Economic Area. This change affects a bank’s access to euro clearing, not the UK’s continued participation in SEPA schemes under the relevant criteria.
SWIFT and SEPA therefore describe different parts of international payment arrangements. SEPA sets scheme rules for eligible euro transfers and direct debits; SWIFT provides a network for financial institutions to exchange payment messages. A payment routed through SWIFT is not automatically a SEPA transaction.
For a UK business, start with the payment itself: identify its currency, whether it’s a credit transfer, direct debit or card payment, and its destination. Then consider whether the relevant bank participates in the required scheme and how it handles payments between the UK and Europe. This explains why SEPA access can remain available even as euro-clearing access and bank fees vary.
Correspondent banking and payment processing
Correspondent banking connects financial institutions across currencies and jurisdictions. Its importance is not just technical: UK businesses rely on institutions maintaining workable arrangements throughout the payment chain. Cross-border payment resilience has therefore become an international policy priority as well as an operational concern for banks.
The G20 made enhancing cross-border payments a priority in 2020. The Financial Stability Board assessed existing arrangements in April 2020, then published a roadmap for improvements in October 2020. In October 2021, it issued its first consolidated annual progress report on the G20 roadmap. Together, these milestones show sustained attention to how international payment systems operate and where their arrangements can improve.
The scale of expected growth helps explain that attention. Cross-border payments were estimated to rise by over $100 trillion in the 10 years from 2017 to 2027. For businesses, increasing activity places greater importance on understanding institutional dependencies, maintaining continuity plans and knowing how changes in one part of a payment network could affect another.
The EBA highlighted the need for financial institutions to assess their direct and indirect exposure to the United Kingdom, consider associated risks and mitigating actions, and implement contingency plans. Direct exposure concerns an institution’s own UK relationships; indirect exposure can arise through dependencies on other institutions. Assessing both gives a broader picture of potential disruption than examining a single banking relationship in isolation.
Customer access was another Brexit-related concern. On 9 October 2020, FCA Chief Executive Nikhil Rathi wrote to the Treasury Committee Chair about bank accounts being closed for customers living in the EU. That issue illustrates why payment continuity and account access should be considered together: a functioning transfer route does not, by itself, resolve a customer’s ability to maintain the underlying banking relationship.
For a UK business, the practical lesson is to understand which institutions and customer relationships its payment activity depends on. Map direct UK exposure, identify dependencies through other institutions and document relevant contingency measures. Also consider whether changes to customers’ access to banking services might affect how they initiate or receive payments.
These considerations connect day-to-day payment operations with the broader reform agenda. The Financial Stability Board’s roadmap focuses on improving cross-border arrangements, while the G20’s priority underscores their systemic importance. For UK firms, understanding institutional dependencies is a useful foundation for assessing resilience as international payment activity grows.
Post-Brexit application of EU payment rules to UK businesses
For UK businesses, the key is to assess how a rule affects a particular service and payment relationship, rather than treating “cross-border” as one legal category. A business paying an overseas supplier has different responsibilities from a firm providing payment services or holding customer funds. This distinction helps frame post-Brexit cross-border payment compliance for UK operations.
Payment flows between the UK and EEA may be treated differently from payments within the EEA, which can affect how businesses assess their payment arrangements. The principal amount of affected wire payments is therefore no longer protected from deductions or claimbacks. For a UK company receiving an international transfer, this can affect how it reconciles the amount instructed with the amount credited.
Safeguarding arrangements also need review. UK payment and e-money firms holding safeguarded funds in EEA accounts should review due diligence on those accounts and manage the increased risks arising after the transition period. A material change affecting the original decision to appoint a safeguarding bank is also a reason to revisit that due diligence.
When assessing a payment, first establish your role: payer, payee, payment service provider or firm holding safeguarded funds. Then identify whether the service involves an EEA-based customer or an EEA account, and determine which party’s obligations apply. This separates your own payment decisions from regulatory duties attached to providing a financial service.
Next, consider the commercial effect of the payment route. A UK company expecting a particular net amount from an EEA wire should allow for possible deductions before reconciling its invoice. A payment institution holding funds in an EEA account should instead focus on whether its safeguarding-bank due diligence reflects current risks. These are distinct assessments, even when they concern the same payment chain.
For post-Brexit cross-border payment compliance in the UK, document the transaction’s purpose, the parties’ roles, the relevant jurisdictions and any safeguarding arrangement. Use these details to determine which obligations apply to your activity, then keep the assessment current as operations change. This gives you a clear basis for reviewing international payment processes without confusing provider responsibilities with those of a business making a payment.
Businesses developing payment services can explore payment infrastructure options as part of their operational planning.
Gemba: Fast time to market embedded banking
Gemba helps businesses bring branded financial services to market with fast time to market embedded banking. If your organisation is building a financial service that needs a branded customer experience, Gemba’s White-Label Banking Interface offers a relevant starting point.
For businesses managing recurring or high-volume payments, Ultra fast bulk payments and Global payroll address distinct operational needs. The right fit depends on the service you’re building and how it needs to support your customers and payment workflows. Gemba provides infrastructure for businesses, not personal retail banking or cryptocurrency trading.
Alexander Legoshin is the author of this guide. To discuss your business’s embedded banking needs, contact Gemba.
Build your next payment decision with clarity
Strong payment operations begin with deliberate choices: define the service you want to provide, understand where its users and transactions are based, and design processes that can adapt as your business evolves. For UK businesses, post-Brexit cross-border payment compliance is not a matter of interpreting the rules once. It belongs in ongoing decisions about products, partners and payment journeys.
Identify the operational problem that matters most now. Is it the complexity of launching a financial service, the customer experience, or the demands of moving payments at scale? Setting a clear priority makes it easier to assess the infrastructure that supports your wider strategy.
If you’re considering embedded banking for your business, explore Gemba’s approach to banking infrastructure and consider how it could fit your plans. Thoughtful decisions today can help you build payment operations with greater purpose and confidence.
Frequently Asked Questions
What UK rules govern cross-border payments after Brexit?
Start by identifying your role in each payment: business payer, recipient, payment service provider or platform operator. Different activities can bring different rules into play, so don’t assume every obligation applies to every transfer. Record the payment’s purpose, parties, currency and destination, then map relevant controls to those details. This gives you a practical way to direct questions to the right internal compliance owner.
How did Brexit change UK payment services regulations and PSD2 requirements?
Brexit means businesses should assess UK-facing and EU-facing activities separately, rather than rely on a single set of operating assumptions. For example, a UK firm serving customers in an EU country should distinguish the rules affecting that service from those governing a payment it sends to a supplier. Record the customer’s location, service type and payment route together so teams can review changes consistently.
Which UK and EU licenses are required to provide cross-border payment services?
The required authorisation depends on the financial service and the jurisdiction in which the firm serves customers. Map each service to the country where it is provided, then identify the competent authority whose permission applies. A payment route alone does not establish permission to provide the underlying service. Firms assessing a UK-EU model should review customer-facing activities separately from the technical arrangements used to move funds.
What are the UK reporting and safeguarding requirements for payment institutions?
Payment institutions should treat regulatory reporting and safeguarding-bank oversight as related but distinct responsibilities. For safeguarding, UK payment and e-money firms should periodically review due diligence on their banks, including after a material change affecting the appointment decision. Firms holding safeguarded funds in EEA accounts should assess the risks associated with that arrangement. Keep a clear record of review decisions, identified changes and actions taken.
What are the UK rules for cross-border payment fees, exchange rates, and transaction disclosures?
For effective reconciliation, separate the amount instructed from the amount ultimately credited, and record any currency conversion and charges shown during the payment journey. This helps finance teams investigate differences between an invoice value and the funds received without treating every variance as an error. Keep the relevant transaction statement and payment details together so you can trace the exchange-rate disclosure and any deductions associated with that transfer.
How do UK cross-border payment compliance requirements differ from EU requirements?
Compare the actual activity, not just the company’s location. A UK firm may face one set of requirements for domestic operations and another when serving EU-based customers or handling payments involving EU countries. Keep UK and EU assessments distinct, noting the service, customer relationship and payment activity each covers. This makes regulatory changes easier to evaluate without assuming one jurisdiction’s rules automatically apply in another.
What are the UK rules for cross-border payment processing times and execution deadlines?
Plan payment dates around the route and institutions involved, and distinguish an internal payment approval from confirmation that funds have reached the beneficiary. For a supplier payment, set a cash-flow expectation that accounts for the full processing chain, then reconcile it against the eventual account entry. Track payment status at each stage and investigate discrepancies using the transaction reference and destination details, not just the original instruction date.
Frequently Asked Questions
What UK rules govern cross-border payments after Brexit?
Start by identifying your role in each payment: business payer, recipient, payment service provider or platform operator. Different activities can bring different rules into play, so don’t assume every obligation applies to every transfer. Record the payment’s purpose, parties, currency and destination, then map relevant controls to those details. This gives you a practical way to direct questions to the right internal compliance owner.
How did Brexit change UK payment services regulations and PSD2 requirements?
Brexit means businesses should assess UK-facing and EU-facing activities separately, rather than rely on a single set of operating assumptions. For example, a UK firm serving customers in an EU country should distinguish the rules affecting that service from those governing a payment it sends to a supplier. Record the customer’s location, service type and payment route together so teams can review changes consistently.
Which UK and EU licenses are required to provide cross-border payment services?
The required authorisation depends on the financial service and the jurisdiction in which the firm serves customers. Map each service to the country where it is provided, then identify the competent authority whose permission applies. A payment route alone does not establish permission to provide the underlying service. Firms assessing a UK–EU model should review customer-facing activities separately from the technical arrangements used to move funds.
What are the UK reporting and safeguarding requirements for payment institutions?
Payment institutions should treat regulatory reporting and safeguarding-bank oversight as related but distinct responsibilities. For safeguarding, UK payment and e-money firms should periodically review due diligence on their banks, including after a material change affecting the appointment decision. Firms holding safeguarded funds in EEA accounts should assess the risks associated with that arrangement. Keep a clear record of review decisions, identified changes and actions taken.
What are the UK rules for cross-border payment fees, exchange rates, and transaction disclosures?
For effective reconciliation, separate the amount instructed from the amount ultimately credited, and record any currency conversion and charges shown during the payment journey. This helps finance teams investigate differences between an invoice value and the funds received without treating every variance as an error. Keep the relevant transaction statement and payment details together so you can trace the exchange-rate disclosure and any deductions associated with that transfer.
How do UK cross-border payment compliance requirements differ from EU requirements?
Compare the actual activity, not just the company’s location. A UK firm may face one set of requirements for domestic operations and another when serving EU-based customers or handling payments involving EU countries. Keep UK and EU assessments distinct, noting the service, customer relationship and payment activity each covers. This makes regulatory changes easier to evaluate without assuming one jurisdiction’s rules automatically apply in another.
What are the UK rules for cross-border payment processing times and execution deadlines?
Plan payment dates around the route and institutions involved, and distinguish an internal payment approval from confirmation that funds have reached the beneficiary. For a supplier payment, set a cash-flow expectation that accounts for the full processing chain, then reconcile it against the eventual account entry. Track payment status at each stage and investigate discrepancies using the transaction reference and destination details, not just the original instruction date.
