Regardless of the actions taken by regulators, Britain needs a “digital alternative” to depending on Visa and Mastercard for card payments, according to research commissioned by the government released on Wednesday.
The Future of Payments Review’s findings support long-standing concerns in Europe regarding a disproportionate dependence on the two American companies for card payments, despite appeals and initiatives to develop a “home grown” substitute failing to gain much traction.
“If choice can be created, we believe that merchant dissatisfaction will decrease.”
It was suggested that open banking may help enhance the “clunky” direct consumer-to-consumer transfer experience that exists now.
Visa declared that the UK payments landscape was in a favorable position, welcoming the review’s findings. “We are keen to work with Government to ensure the UK continues to be at the forefront of payments innovation”, it continued.Mastercard expressed its gratitude that the evaluation acknowledged the valuable contribution that cards provide, and mentioned that the firm is always making investments in the newest and most cutting-edge payment technologies, such as open banking.
“While cards make a tremendous contribution to the payments landscape, we heard notable dissatisfaction with the cost of card schemes on the part of shops, services, and other merchants – which may be in part due to a lack of choice or digital alternatives to the existing card schemes,” the report stated.
The Payment Systems Regulator (PSR) in Britain is currently conducting an examination of the fees that card schemes impose. This is a long-standing dispute where Visa and Mastercard are pitted against “merchants” who charge their cards to customers making payments.
“Regardless of the outcome of the PSR’s work, we believe the market would be further improved if there was a viable digital alternative to the card schemes,” the report stated.It further stated that “open banking,” or third-party fintechs accessing a customer’s bank data for payments services with consent, would give shops a less expensive option to card systems.
