UK banks unite behind domestic payments network to challenge Visa and Mastercard

UK banks unite behind domestic payments network

The initiative, developed under the umbrella of the UK Payments Initiative, is backed by major lenders including Barclays, HSBC, Lloyds Banking Group and NatWest Group, alongside fintech firms and challenger banks such as Revolut, Monzo and Starling Bank.

The project represents one of the most ambitious attempts yet to reshape the UK’s retail payments landscape and weaken the dominance of Visa and Mastercard, which currently process more than 90% of UK card transactions.

Geopolitics and Sovereignty Drive Strategic Shift

The scheme emerges amid growing geopolitical concerns surrounding Europe’s dependence on US-owned financial infrastructure.

According to reports, discussions intensified earlier this year after fears that a future US administration could potentially restrict access to critical payments networks during periods of geopolitical tension.

The new framework seeks to establish a domestic alternative built around account-to-account payments, enabling transactions to move directly between bank accounts without relying on traditional card rails or intermediary processors.

The model closely mirrors successful systems already operating internationally, notably Brazil’s Pix network and India’s Unified Payments Interface (UPI), both of which have dramatically accelerated low-cost real-time digital payments adoption.

Participating institutions have reportedly finalised the scheme’s rulebook, operational standards and commercial framework following a period of live testing.

Open Banking Moves Towards Mainstream Adoption

The initiative could also mark a significant turning point for open banking in the UK, which has struggled to achieve mass consumer adoption despite years of regulatory support.

Initially, the payment scheme is expected to focus on sectors well suited to recurring or low-friction account-to-account transactions, including government payments, utilities, charities and financial services.

Supporters argue the infrastructure could lower transaction costs for merchants while reducing dependence on international card networks that have faced criticism over rising processing fees.

The UK effort also reflects a wider European trend towards payments sovereignty. The European Payments Initiative’s Wero platform, launched in 2024, has already attracted tens of millions of users across France, Belgium and Germany.

For the UK banking sector, however, the stakes may be even higher. Beyond cost savings and innovation, the initiative represents a strategic attempt to regain greater control over national payments infrastructure at a time when digital transactions increasingly underpin economic resilience, financial stability and technological independence.

If successful, the scheme could fundamentally alter the balance of power within Britain’s payments ecosystem over the coming decade.