BrexitAs the UK has officially started the process of leaving the European Union, the Prepaid International Forum (PIF), a trade association for the prepaid financial services sector, urges Prime Minister Theresa May and the UK’s Brexit negotiators to avoid any scenarios involving trade barriers to the financial markets, especially in the fintech sector.

Banking Technology‘s sister publication Paybefore reports.

A huge issue for the payments industry is how passporting will work because a large majority of European e-money issuers have licenses in the UK that they passport elsewhere.

“Removing financial passporting to the EU, that currently allows UK-based businesses to access Europe and vice versa, will harm both parties,” says Alastair Graham, a PIF spokesperson. “We call on the UK government to address passporting matters early on in the process to bring about clarity and safeguard business continuity.”

PIF highlights the role the UK plays in the EU’s fintech sector, especially the prepaid financial services sector, which it said is estimated to be worth £65 billion annually across the EU and UK. PIF adds that the UK is considered a gateway to Europe for US and other international fintech businesses.

“A pragmatic approach from both parties in the Brexit negotiation would not only protect jobs and the wider economy, but also ensure that the EU continues to benefit from the advances in innovative financial services and greater financial inclusion being driven by fintech and prepaid sector businesses,” Graham says.

Addressing the passporting issue could include rejoining the European Economic Area (EEA) as a member of the European Free Trade Area, which would keep passporting policies status quo, according to Martin Koderisch, manager at the London office of Edgar, Dunn & Co, who outlined possible scenarios days before the UK voted to leave the EU. Another option is a free trade agreement between the UK and the EU, which Koderisch said “probably offers both sides the best chance for a mutually desirable outcome” because it could be a single deal instead of piecemeal agreements.

In the letter delivered to the EU Council President Donald Trusk, the UK Prime Minister outlines issues that need to be addressed during upcoming discussions. Among them is a “bold and ambitious” Free Trade Agreement between the U.K. and the EU that “covers sectors crucial to our linked economies, such as financial services and network industries,” May writes. She adds that both sides need to “prioritise how we manage the evolution of our regulatory frameworks to maintain a fair and open trading environment, and how we resolve disputes.”