EORI Identifiers

EU merchants selling into the UK must now add a 20% charge to goods up to GBP 135 (equivalent to EUR 156) to account for VAT charged at the point of sale, beginning January 1, 2022. Similarly, businesses in the UK that import or export goods from the EU will now be required to have an Economic Operator Registration and Identification (EORI) number when transporting goods to and from specific areas of the EU.

EORI numbers must adhere to government guidelines, and applying for a number through government services is required. The type of EORI number you require will be determined by where you are shipping goods to and from, and you may require more than one! EORI numbers are essential for cross-border transportation of goods, as without one – or if you have the wrong one – your goods may be delayed or held in storage until the correct EORI is received.

Fees for Intra-Regional Interchange

Existing interchange fees, as well as various customs and VAT costs, are being revised, particularly for transactions originating in the UK and processed in the EEA.

Mastercard announced earlier this year that it would more than fivefold the intra-regional interchange fees for online EU purchases made by British cardholders beginning in October 2022. Fees for debit cards and credit cards are expected to rise from 0.20 percent to 1.15 percent and 1.50 percent, respectively. While these increases are unwelcome for many, they do align with already existing inter-regional interchange fee caps for all EU merchants.

Despite these changes, retailers throughout the EU should not write off UK operations due to increased transaction processing and logistics costs. Instead, we advise assessing the impact of these fee changes on the transaction mix and determining whether alternative strategies, such as localisation tactics and like-for-like proceedings, could mitigate the effects of these cost increases.

With the aforementioned barriers in place, and considering all other potential challenges that e-commerce businesses may face as a result of Brexit, here are a few tips clients and merchants can consider in order to overcome such challenges.

1. It is critical to localize payment methods

According to various reports, one out of every five transactions is abandoned because the consumer's preferred payment method is not available during the checkout process. Card payments and PayPal, for example, are widely used in the United Kingdom. Other options, such as Buy Now, Pay Later (BNPL), are also becoming more popular. In the meantime, consumers in Belgium and France use local card schemes such as Bancontact and Cartes Bancaires. When making online purchases in the Netherlands, Dutch consumers are more familiar with iDEAL bank transfers. It's critical to understand where you're selling and the payment methods your customers prefer. You can improve your payment approval and conversion rates by doing so.

2. Evaluate your chargeback management and mitigation procedures

Chargebacks cost the average merchant 1.40–2.5% of their total revenue. It is critical to have well-thought-out strategies in place to avoid unnecessary claims during the Brexit transition period.

When developing your strategy, make sure you communicate how Brexit is expected to affect cross-border online shopping. The best way to accomplish this is to provide tracking information, receipts with explicit billing descriptors, and customer service contact information to keep customers up to date on delivery updates. Furthermore, ensure that you always respond quickly to purchase inquiries; that you clearly list full terms and conditions on your website, including information on the refund process.

3. Make use of the one-way charging system

More prominent merchants may want to consider setting up an entity in the UK to take advantage of the fact that the fees only occur in one direction. Businesses can avoid paying fees entirely by doing so. This could be significant, and Goldwin Merchant Incorporations can provide all of the knowledge and insight you need to save time and money. Furthermore, card-present rates remain unchanged. Lower fees will apply if shoppers choose to pick up the item and pay in-person, namely 0.30 percent for credit cards and 0.20 percent for debit cards. This will only apply to large merchants with physical stores in the United Kingdom.

4. It is critical to implement Secure Customer Authentication (SCA)

With all of these changes, you must never lose sight of the upcoming regulatory changes. The most recent was PSD2, which gradually went into effect in January 2018, bringing with it the additional security measure, Strong Customer Authentication (SCA). SCA is essentially a balancing act between creating enough friction to reduce fraud risk while not losing customers. SCA provides businesses with the opportunity to innovate and gain more control over their data by collaborating with a partner to maintain high approval rates during the transition.

Whether a merchant is based in the UK or has yet to comply in the EU, it is critical to seek SCA compliance as soon as possible. If you do not, you will experience increased declines from European card issuers, which will eventually result in significant fines for noncompliance.'

We understand that the ongoing changes brought about by Brexit are perplexing, which is why our consultants are ready to answer any questions that new and existing clients may have while navigating these new markets.

How can Goldwin Merchant Incorporations assist you?

The goal of our carefully selected payment partners is to achieve the highest conversion rates by optimizing a merchant's online payment performance. As a merchant, you will have specific needs; if you require comprehensive assistance with your cross-border online payment processing, contact us today. Contact us by phone at +44 XXXXXXXX, email at [email protected], or fill out a contact form, and one of our consultants will get back to you as soon as possible.

Goldwin Merchant Incorporations has made every effort to ensure that the information on this website is accurate and reliable. The information, however, is provided "as is," with no warranty of any kind. Goldwin Merchant Incorporations assumes no responsibility or liability for the accuracy, content, completeness, legality, or dependability of the information on this website.