UK Banks Reportedly Explore Visa/Mastercard Alternative
A group of UK banks are reportedly exploring the creation of an alternative payment network to Visa and Mastercard. The move is said to be motivated by political and regulatory uncertainty, including the potential for a new Trump administration in the U.S.
- The initiative, internally known as DeliveryCo, is being chaired by Vim Maru, the UK chief executive of Barclays. Key participants in the funding group include major institutions like Lloyds Banking Group, NatWest, Santander UK, and Nationwide. Interestingly, both Visa and Mastercard are also part of this group, framing the effort as a move towards resilience rather than a direct replacement of their networks. - This move is not happening in a vacuum; the UK has a sophisticated real-time payment infrastructure called the Faster Payments Service (FPS), which was launched in 2008. Operated by Pay.UK, FPS processes transactions in near real-time, 24/7, and is accessible to nearly all UK bank account holders for transfers up to £1 million, although individual banks may set lower limits. - Regulatory bodies are actively shaping the UK payments landscape to foster competition and innovation. The Payment Systems Regulator (PSR) is focused on open banking and the "New Payments Architecture," an industry-wide initiative to modernize account-to-account payments. Furthermore, a November 2024 "National Payments Vision" aims to create a world-leading payments ecosystem built on next-generation technology. - Concerns over the operational resilience of payments infrastructure have been amplified by geopolitical events, such as the suspension of Visa and Mastercard services in Russia due to sanctions. With approximately 95% of UK card transactions flowing through Visa and Mastercard, the concentration of reliance on US-based networks is seen as a potential vulnerability. - The Bank of England is actively involved in the project, developing infrastructure blueprints for the proposed system which are expected to be delivered to the funding group in the coming year. The new payment system is tentatively projected to be operational by 2030. - In parallel with infrastructure development, there is a strong focus on digital identity and fraud prevention within the UK's financial services sector. A 2025 survey by FICO revealed that 70% of UK consumers list fraud protection as a top priority when choosing a new bank. In response, financial institutions are increasingly adopting biometric authentication and leveraging AI for real-time fraud detection. - The UK government is also advancing its digital identity framework, with the "Digital Identity and Attributes Trust Framework (DIATF)" setting the standards for secure and verifiable digital IDs. This initiative is expected to streamline customer onboarding (eKYC), reduce fraud, and enhance the overall security of digital transactions. - The push for a domestic alternative aligns with broader European concerns about over-reliance on non-European payment networks. The current bank transfer process in the UK, while an alternative to cards, is often considered "clunky" and lacks the consumer protections and commercial incentives to scale effectively for retail payments.
