The Guardian recently reported that UK bank bosses will hold their first meeting to establish a national alternative to Visa and Mastercard, with City institutions fronting the costs and the initiative backed at policy level by government. The project, sometimes referred to as “DeliveryCo”, is being positioned as a resilience measure in a world where payments infrastructure has become critical national plumbing.
For everyone watching, the instinctive reaction may be mixed. On one hand, the dominance of Visa and Mastercard is real. According to the Payment Systems Regulator, more than 95% of transactions using UK-issued cards run through those two networks. That level of concentration is not healthy in any market, particularly one that touches almost every pound of consumer spending.
On the other hand, when the same financial institutions that have operated within (and benefited from) that structure begin building the “alternative,” it is reasonable to ask whether this represents genuine competition or just simply managed reform. The difference matters as it forms the basis of the argument as to whether this is the breaking of a genuine duopoly, or if this is simply just supervised variety that will continue to protect corporate margins and potentially increase risk to UK taxpayers.
The real issue is market openness, not nationality
The concentration of card payments in the hands of Visa and Mastercard did not arise overnight. It emerged through powerful network effects, regulatory complexity, global interoperability and consumer habit. The system works efficiently. Cards are convenient. Fraud protections are embedded. International commerce is seamless. But efficiency at scale does not automatically translate into competitive pricing power for merchants and consumers.
For businesses, payment costs are not abstract. Merchant service charges, scheme fees, cross-border uplifts and processing margins quietly reduce profitability every single day. In a tight-margin business, even small percentage differences compound significantly over a year.
A credible alternative rail could, in theory, introduce pricing pressure and reduce that drag. That is the optimistic interpretation of this initiative. Institutions including Barclays, NatWest and Lloyds Banking Group are reportedly involved in early discussions, with the Bank of England developing infrastructure blueprints and the Treasury offering policy support.
The resilience argument is straightforward. If payments infrastructure is critical, relying almost entirely on two foreign-owned schemes is uncomfortable. From a central banking perspective, building redundancy is prudent. But nationality is not the core problem. Concentration is.
If the UK simply replaces reliance on two global networks with reliance on a domestically governed consortium, UK businesses may see little practical difference. Competition only changes outcomes when the market is genuinely contestable, which in its current and proposed form, it is not.
When “City-funded and government-backed” needs scrutiny
The Guardian describes the initiative as City-funded but government-backed. That phrasing is important.
If the project is privately capitalised and commercially governed, with shareholders carrying the financial risk, it operates within market discipline. That is healthy. Losses sit with investors. Incentives remain aligned with commercial viability. However, when infrastructure becomes systemically important, markets often assume implicit support. If a new rail becomes critical to the functioning of the economy, would the state realistically allow it to fail? This is not an accusation; it is a structural question that must be addressed.
The public should not reflexively assume that losses will be socialised as there is no evidence of taxpayer underwriting at this stage. But clarity on governance, capital at risk and limits of public support will determine whether this evolves into a truly commercial competitor or a quasi-public utility with private upside and socialised downside.
Resilience is not the same as competition
One executive quoted in coverage suggested that if Visa and Mastercard were switched off, the UK would be thrown back decades in terms of payments infrastructure. That illustrates the resilience argument vividly. Businesses cannot function without reliable transaction rails. Businesses in particular would feel disruption first. Larger corporates often have multiple acquirers and contingency frameworks. Smaller firms operate leaner systems. When payments stall, cashflow stalls, the economy stalls. So resilience is necessary.
But resilience alone does not guarantee lower costs or greater innovation. A resilient duopoly is still a duopoly. A resilient oligopoly is still concentrated corporate interest. If this initiative simply adds an additional rail without meaningfully lowering entry barriers for challengers, the structure of the market will remain largely intact.
The UK already has disruptive ingredients
The UK has been a global leader in Open Banking, and that leadership is not theoretical. It has already produced practical, working alternatives to traditional card rails.
Account-to-account payments allow customers to pay directly from their bank to a merchant’s bank, bypassing Visa and Mastercard entirely. Instead of routing a transaction through a card scheme, an acquirer, and multiple fee layers, the payment moves through regulated bank infrastructure. For merchants, that can mean materially lower transaction costs and faster settlement. This technology already exists. The infrastructure already exists.
The friction lies in consumer behaviour, standardisation and scale, not in capability.
One example is Boodil. Boodil is an Open Banking–enabled payment provider that facilitates direct bank-to-bank transactions at checkout. When a customer selects Boodil, they are redirected securely to their banking app to authorise payment. Funds move directly between accounts, cutting out the traditional card scheme layer.
For merchants, the economic impact can be meaningful. By removing card scheme fees and reducing intermediary costs, businesses can lower their blended transaction rate. In practice, many businesses are already using this model for online checkouts, repeat customers, or specific transaction types where card protections are less critical.
A number of our own clients have integrated bank-to-bank options into their shops and ecommerce flows. They have not eliminated cards entirely, nor should they as the payment behaviour of consumers is clearly dominated by traditional debit and credit cards. But they have introduced genuine optionality. In doing so, they are actively “de-Visa’ing” and “de-Mastercarding” parts of their revenue stream. The result is tangible savings over the course of a trading year. That is real competition in action.
If policymakers genuinely want to reduce reliance on card networks, accelerating Open Banking adoption and making bank-to-bank payments as frictionless and trusted as card payments could be transformative. It would encourage bottom-up competition, where fintechs scale because merchants and consumers choose them, not because institutions collectively authorise a new rail and get taxpayers to foot the risk of a huge infrastructural “Sovereign Payment” system.
Building a new institution-led payments network may improve resilience as defined by the BoE and banking groups. But unless it lowers barriers and expands access for providers of any size to enter the payment processing space, it risks preserving a top-down structure in which only established players operate at scale.
Can a normal challenger realistically compete?
In a healthy market, credible entrepreneurs should be able to build, raise capital and scale new infrastructure within a transparent regulatory framework. Payments is a complex space, and rightly so. It touches fraud, anti-money laundering, consumer protection and systemic risk. High standards are necessary. But when compliance complexity, access to clearing systems and capital requirements effectively confine serious competition to a small circle of incumbent institutions, the market is not fully open.
If only large banks, governments, and major payment firms can realistically build the challenger, then the system remains structurally concentrated, regardless of branding.
The public should therefore assess this “Sovereign Payments System” initiative not by its rhetoric, but by its openness. Who can participate? On what terms? Are access rules transparent? Can fintechs integrate fairly? Is pricing disciplined by competition, or set by committee?
Competition is not created by governments, central banks, and private banking groups gathering together to announce change. It is created by lowering barriers.
What this all means for businesses and consumers
The practical test is very simple. Will merchant fees fall in a meaningful way? Will settlement improve? Will businesses and consumers gain real negotiating leverage because credible alternatives exist?
If the answer is yes, this could be genuine reform.
If the answer is no, then this is just another institutional layer in the payments stack, branded as resilience, but funded by merchants and, in the worst case, protected by taxpayers.
Payments are no longer background infrastructure; they are margin infrastructure. In a digital economy, the rail determines the economics. And access to building or competing on that rail determines whether the market is fair.
Challenging the Visa–Mastercard duopoly is sensible. Concentration weakens competition and increases fragility. But replacing one concentrated structure with another, even if it carries a domestic badge, is not reform.
If the same investment circles, governance groups and regulatory gatekeepers remain in control, margins will remain concentrated. Nothing material changes, and the average founder cannot meaningfully enter the market with a challenger solution.
If the UK wants a genuinely competitive payments landscape, it must lower structural barriers. New entrants must be able to compete at scale. Governance must prevent incumbent capture. Pricing must be disciplined by real market pressure and transparency, not by the very institutions whose margins depend on keeping it closed.
In the end, the health of the payments market will not be judged by who builds the rail, but by whether anyone else is allowed to build one too.
Speak to Finspire Finance
If you’re ready to implement alternative payment rails or advance capital against your monthly takings, speak to Finspire Finance.
Lower payment costs and stronger cashflow start with the right structure.
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