Impact on business costs
Following Brexit, significant impact is expected on imports/exports and international shipping. Changes to tax rules and customs processes imply potential shipping delays, supply shortages and additional costs for businesses and customers. Businesses may also need an Economic Operators Registration and Identification (EORI) number, a unique identification code used to register and track imports and exports into and out of the EU.
UK-based businesses cannot hold or register a .eu web domain anymore since EURid has reserved these for EU residents and citizens only. This means additional costs related to purchasing new website domains or general website administration. These changes raise questions on product pricing, and the marketing initiatives needed to communicate these changes to customers with sensitivity.
Communicating with customers & Retaining customer loyalty
In these confusing times, it is critical to communicate with your customers in order to encourage customer loyalty. Being proactive, honest and transparent goes a long way in building empathy and trust amongst customers. Consider sharing important company updates and any process changes that your customers need to know about.
Ensuring greater compliance
Protecting customer privacy and following local GDPR laws is crucial. Post-Brexit, the UK also has its own version of the GDPR. While there are not many differences between the two, it is important to ensure all compliance requirements are adhered to. Seeking legal counsel and confirming with them is imperative for business continuity for business operating in and outside the EU.
Another aspect to watch out for is the Ecommerce Directive. The Ecommerce Directive allows European Economic Area (EEA) online service providers to operate in any EEA country while complying with local laws in the country in which they are established. However, this framework will no longer be applicable to UK service providers following Brexit. As a business owner, check if are under the scope of the Ecommerce Directive, and ensure that you are compliant with the requirements in each EEA country you operate in. Stay up to date on all related developments and legal requirements in countries of operation, and seek legal advice wherever necessary.
Revisiting your payment acceptance strategy
Brexit is likely to have an impact on your payments acceptance as well. If you are an EU-based seller with customers in the UK, certain factors to keep in mind:
Currency fluctuations: Keep track of volatility in exchange rates which could negatively impact your margins. Consider adjusting prices for UK customers to counter fluctuations and charge them in the local currency (pound sterling) to improve sales.
Local payment changes: Post-Brexit restrictions could hinder local payment methods. Hence, use a payments solution that offers preferred local payment methods and makes local currency settlement and cross-border fees easier. This will encourage greater loyalty from UK customers.
Restricted cross-border movement: Stricter cross-border movement regulations post-Brexit are likely to impact supply and increase shipping times. This could deter UK customers from shopping from outside the UK. To address these issues, keep adequate reserves locally to fulfil demand and use a UK-based third-party fulfilment service for storage and distribution.
Policy updates: Stay up-to-date on the current situation and any policies and regulations related to trade and payments acceptance. Use suitable sources, such as the UK Government website to keep yourself informed of the situation as it evolves.
Jose Augustine is the Chief Business Development Officer at Novalnet with extensive experience in European payment industry and a knowledge powerhouse.