Online merchants selling to UK shoppers face burdensome challenges, risks, and complexities due to Brexit. From new tax rules and regulations to consumer data privacy laws, it’s crucial that brands stay on top of Brexit’s impact on ecommerce and the UK’s changing requirements.
Below are 5 common ecommerce challenges for brands selling into the UK, post-Brexit:
1. Delays in Shipping
Consumers are having to wait longer for deliveries and pay more for cross-border purchases as new trade regulations and value-added –tax (VAT) increases go into effect following the UK’s withdrawal from the EU.
All shipments between the UK and EU member countries are subject to new customs clearing rules. Online merchants will need to make customs declarations, know how to properly classify their goods, and follow safety and security requirements. Along with that, it’s crucial to display transparent pricing at checkout, so shoppers aren’t surprised with additional fees upon delivery. To avoid poor customer experiences, brands need to be hyper-aware of these new rules and have the right systems in place to avoid delays at customs.
2. Cross-Border Taxes and Duties
Tax management has been one of the most challenging complexities coming out of the post-Brexit trade agreement. There are new duties and tax requirements when selling into the UK. Among them, all B2B services (digital goods) being sold to UK buyers, regardless of their value, are now subject to value-added tax (VAT) of 20%.
Brands that care about customer experience will want to provide their customers with accurate information regarding fees, taxes, duties, and shipping rates at checkout. Furthermore, keeping up with the ever-changing local rules and regulations in markets like the UK is crucial to avoid unwanted fees or fines.
3. Cross-Border Returns
Managing international returns can be a heavy lift for brands, especially when there’s a high risk of chargebacks. Shipping delays are already an issue for UK shoppers in this post-Brexit world, so merchants need to be prepared to manage an increased number of returns and rejected shipments. Being transparent with your customers at checkout and displaying the total landed cost of their purchase, including taxes, duties, and shipping costs, will reduce the number of returns.
4. Data Protection Regulations
Extensive knowledge and local experience are crucial when navigating the post-Brexit regulatory landscape. Brands have the opportunity to scale their operations if they’re willing to take on the risk and responsibility of managing the ever-changing compliance landscape. But it’s increasingly complex and expensive, which is why finding a partner who has ecommerce experience and specialized experts who can take on those risks is key to entering this market successfully.
5. Increased Card Fees
After the UK departed from the EU, interchange fee caps were no longer applicable in the UK. As a result, both Visa and Mastercard announced they would increase their interchange fees for accepting UK issued debit and credit cards, effective October 15, 2021. The Visa interchange fee increased from 0.3% to 1.5% while the Mastercard interchange fee increased from 0.2% to 1.15%.
These increased fees directly impact brands when consumers make card payments online between the UK and EU. This could be the first of many interchange fee increases that card brands implement, so if your brand plans to sell into the UK, make sure you have a plan in place to combat these fee increases.
The Bottom Line
Selling into the UK after Brexit is a challenge that shouldn’t be underestimated. Brands are expected to comply with the ever-changing rules and regulations while delivering a local experience with the language, currency and unique payment methods that shoppers prefer. But you shouldn’t have to do it alone.
How Digital River Can Help
In one partnership, Digital River can simplify your back-office complexities, including international payments, taxes, fraud, compliance, financial reconciliation, and logistics. No need to stress over cross-border shipping, increased card fees, or data protection regulations. As the merchant of record with a local presence in the UK, we take the post-Brexit complexities off your shoulders, so you can focus on delivering exceptional experiences to your customers.
Interested in expanding into the United Kingdom or any of our 240+ international markets Connect with Digital River today to learn more about how we can solve these challenges and navigate UK ecommerce after Brexit.