[1/2]In this image, a Mastercard logo is seen on a credit card on August 30, 2017. Portal/Thomas White/Illustration/File Photo Acquire License Rights
LONDON, Nov 22 (Portal) – Britain needs a “digital alternative” to its reliance on Visa and Mastercard for card payments, regardless of regulators’ actions, a government-commissioned report said on Wednesday.
The Future of Payments Review’s conclusions reflect long-standing complaints across Europe about heavy reliance on the American duo for card payments, although calls and attempts to create a “domestic” alternative have made little progress.
“While cards make an enormous contribution to the payments landscape, we have heard significant dissatisfaction among stores, services and other merchants with the cost of card systems – which may be due in part to a lack of choice or a lack of digital alternatives to existing card systems,” the review says.
The UK Payments Systems Regulator (PSR) is reviewing the fees that card schemes charge. This is a long-running dispute between Visa and Mastercard and “merchants” who charge fees for accepting their cards from customers who make 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 card systems,” the review said.
So-called open banking, or third-party fintechs that use data from a customer’s bank with permission to offer payment services, could create a cheaper alternative to card schemes for retailers, he added.
“If choice can be created, we believe dealer dissatisfaction will decrease.”
Open banking could also improve the current “cumbersome” experience of direct consumer-to-consumer transfers, it said.
Visa welcomed the review’s conclusion and said the UK payments landscape was in a good place. “We are keen to work with the government to ensure the UK continues to be at the forefront of payments innovation,” it said.
Mastercard said it welcomed the review’s recognition of the contribution cards, adding that the company continues to invest in the latest and most innovative payment technologies, including open banking.
Reporting by Huw Jones; Additional reporting by Jose Joseph; Edited by Kirsten Donovan, Alexandra Hudson
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