Remember the exciting day? Your first smartphone.  It came with all sorts of features and worked pretty much anywhere you could reach. Your “home” country code and phone number were initially considered as the base from which you reached the world virtually. Unless you experienced an unwelcome charge or delay, your world was a borderless frictionless experience, your local foundation hidden within a global experience.

Your corporate bank account structure might feel similar: carefully considered and designed to give you best access, optimisation, and reach.

How Brexit will affect payment processing

Borderless frictionless payments and seamless integrated liquidity management sound like good things. In order to reach this goal, the European Union (EU) has spent the past decade harmonising the way monies are transferred. The implementation of the Second Payment Services Directive (PSD2) spearheaded this political objective of creating a single, competitive payments market for Europe. Essentially, payments across the United Kingdom (UK) and the European Economic Area (EEA), in any currency, were treated as ‘domestic’ by Payment Service Providers (PSPs). This ensured protection of the principal amount and resulted in less onerous payment data requirements. So it is no surprise that the UK’s departure from the EU (Brexit) has changed how customers do business in the region.1

As the reality of Brexit appeared at the start of the withdrawal process, the financial sector went into preparation mode to manage the eventual European Banking Authority (EBA) position. UK-based financial institutions could no longer passport their UK regulatory license and authorisation, effectively cutting off any cross-border operations with the EEA. Many PSPs navigated new legal entity structures, clearing scheme connections, employment models and technology changes – all against the challenging backdrop of adapting to COVID-19’s impacts.


Brexit reintroduces both known and unknown implications of payment processing—increasing complexity, friction and cost.


As treasury and payments professionals awake to the reality of Brexit, they now have to grapple with "new" regulations and operate in a more complex European payments environment. Simultaneously, there remains their existing challenges of managing liquidity, safeguarding business continuity and optimizing working capital to manage COVID-19 related disruption.

The exhibit below captures some of the key changes relevant to our clients.


Complexity, friction, and cost are unwelcome words; however in the situations above it is hard to class them in entirety as unpredictable. Each individual impact to an end user paints a new picture in aggregate for cross-border payments and indeed the cash management thinking in the prior landscape. When viewed together, operational elements can and should influence strategic choices.

Operations meet strategy: Optimizing working capital in a changing geopolitical landscape

Your phone could go anywhere, but it had a true home. So does your bank account structure. Is it fit for purpose given this new reality? What impact does it now have on the reach, access, and cost of maintaining and building new relationships with customers, suppliers, and your own entities? We’re having a lot of conversations with our customers these days that focus on these themes and how J.P. Morgan may best help them meet their respective needs and achieve their objectives.

"Borderless frictionless payments and movement of liquidity are possible, but it takes effort to understand and adapt them to the new geopolitical landscape within your cash management strategy."

Borderless frictionless payments and movement of liquidity are possible, but it takes effort to understand and adapt them to the new geopolitical landscape within your cash management strategy.

J.P. Morgan understands that the answer to these challenges is dependent on each company's unique set of challenges and priorities as it navigates this new environment. As a European bank, our range of capabilities enable us to offer optionality through the breadth of the global J.P. Morgan franchise. This includes our five centralisation hubs (Luxembourg, Germany, Ireland, the Netherlands, and the UK), which are the pillars of our broader European footprint. This helps maintain our current level of service and product offering to our clients, increases optionality and insulates against the changing landscape. We have expanded product capabilities and services in our European treasury hubs to offer a full suite of cash management and liquidity solutions: payments, receipts, liquidity management and account services. Our investment in a multi-legal-entity based platform enables you to bank with any of the hubs and branches based on your European structure, geographical preferences and solutions utilised.

Clients can also benefit from the J.P. Morgan single global liquidity platform, and may choose to pay / receive into an EEA hub (or the UK for GBP). Such liquidity can be swept across J.P. Morgan locations in the UK-EEA on a same-day basis for consolidation purposes as required, thereby avoiding the impact of cross-border charges being applied by other providers.

Last but not least, we continue to leverage our voice in the industry to actively promote best practise in payments, with the goal of driving greater transparency, speed and simplicity.

In these uncertain times, we thank you again for your continued trust in J.P. Morgan. Please contact your J.P. Morgan representative for further information.


1. At the end of the transition period on 31 December 2020, the UK left EU and EEA institutional frameworks. The EEA includes non-EU countries, e.g. Norway, Iceland and Liechtenstein . The scope of this article includes payment frictions impacting UK-EU flows and UK-EEA flows more broadly.


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