There is a strong likelihood that every bank card or credit card in your wallet prominently features one of two logos: Visa or Mastercard. These American financial services behemoths provide payment processors that link banks to merchants during transactions. Banking executives are convening this Thursday to deliberate on establishing a national alternative to Visa and Mastercard for UK residents.
What Is the Proposed Payment Network?
The new payment network, spearheaded by the industry-led organization DeliveryCo, could be operational by 2030. An executive involved in the project informed The Guardian: "If Mastercard and Visa were disabled, it would revert us to the 1950s. Naturally, we require a sovereign payments system." This initiative is critical, given that 95% of transactions in the UK currently utilize payment systems owned by Mastercard and Visa.
How Would This Alternative Impact Your Finances?
Financial experts emphasize that the primary benefit would be enhanced safety for the money in your bank account. Chris Jones, managing director at PSE Consulting, highlights a scenario: "Consider Russia. When the White House compelled Visa and Mastercard to halt services due to the Kremlin's invasion of Ukraine, Russians were left unable to make payments or access funds. Russian establishments and ATMs also could not accept internationally issued cards."
Jones elaborates: "The majority of us depend on Visa and Mastercard for daily payments, whether purchasing coffee, shopping online, or booking travel. This implies that any significant disruption to these networks could impact a vast number of daily transactions. Banks are exploring the creation of a UK-based alternative to ensure payments continue seamlessly, even if global systems encounter issues."
He adds that a British payment processor would function as a "backup generator" for public funds, often unnoticed but crucial in emergencies. The Bank of England has described this system as an additional payment rail, a term for payment infrastructures.
Challenges in Establishing a New System
Johannes Kolbeinsson, CEO and co-founder of payment processor PAYSTRAX, points out the difficulties: "Visa was established in 1958, with Mastercard following less than a decade later. Developing a money transfer system as entrenched as these two firms takes considerable time. Creating a new UK-wide payment system with equivalent usability, technology, trust, and adoption is entirely unrealistic and would require decades at minimum. Even then, any new competitor would likely remain significantly behind the incumbents."
Understanding DeliveryCo and the Initiative
The meeting and DeliveryCo are not novel developments; they are part of a multi-year government effort to construct new payment infrastructure. DeliveryCo, also known as the Delivery Company, is tasked with devising optimal methods to modernize payment processes for British consumers. The group includes Visa, Mastercard, most major banks, and ATM networks, with a preliminary meeting scheduled for Thursday.
Mastercard has clarified to Metro that the meeting has been "misrepresented" by the media. A spokesperson stated: "This week's meeting is part of the longstanding and orderly process initiated by the Government's National Payments Vision in 2024. Both the meeting and its timing align with this established program. Any contrary suggestions are inaccurate." The company reaffirmed its commitment to investing in the UK.
A Visa spokesperson told Metro: "We remain dedicated to offering UK consumers and businesses access to innovative, secure digital payments with top-tier resilience and reliability. We support industry advancements in account-to-account payments in the UK. We believe competition among multiple solutions, on a level playing field, will foster choice, innovation, and economic growth in the UK."
