UK banks are right to try break the Visa-Mastercard duopoly

It is hardly surprising that the UK banking sector wants to loosen its dependence on Visa and Mastercard. The effort reflects a wider European push to curb reliance on US technology and financial infrastructure. As the world’s two dominant payments networks, they wield enormous influence over global commerce influence that has prompted concerns about concentrated market control and structural dependence. Yet, in its current form, this bid for greater autonomy looks unlikely to succeed.

A structural shift, not just a software fix

Payments are fundamentally different from other areas of technology. Unlike enterprise software, there is no straightforward “open source” equivalent waiting in the wings. Building a viable alternative to global card schemes is not just a technical undertaking; it requires merchants, consumers, and banks to adopt it simultaneously.

To date, the most credible European initiative aimed at reducing U.S. dependency has been Wero, a unified European account-to-account digital wallet and instant payment system which is being rolled out across the region. However, it remains limited in scope. It is not yet available across the entire EU, has only recently begun supporting eCommerce payments, and does not yet offer key capabilities, such as Near Field Communication (NFC). Interoperability with other local schemes is planned, but meaningful traction will take time and will likely require sustained government backing. Even then, success is far from guaranteed.

The network effect problem

The fundamental issue is adoption. For any new payment system to succeed, it must achieve simultaneous scale among consumers and merchants. Without a sufficiently large number of users on both sides, any new payment scheme will struggle to compete. Consumers and merchants in the UK and Europe are deeply accustomed to card payments, and there is little incentive to switch unless the alternative offers a significantly better experience. At present, it is not evident that this is forthcoming – card acceptance is deeply embedded, secure and cost-effective, making it a difficult incumbent to displace. 

Comparisons to systems like Unified Payments Interface (UPI) in India or Pix in Brazil are often cited, but they are misleading. In both cases, adoption was driven by the shift away from cash rather than by the displacement of well-established card networks. In both countries, card penetration was much lower than it is in the UK and Europe. In contrast, the UK and Europe already have highly mature card ecosystems, making behavioural change far more difficult.

Resilience over replacement

Rather than pursuing outright replacement, businesses would be wise to prioritise resilience. Governments are already advising citizens to keep cash on hand for emergencies, underscoring concerns about systemic vulnerabilities, from connectivity failures to wider infrastructure risks. For merchants, this means diversifying payment options and working with providers that can offer alternative routing in the event of scheme outages.

Long term, Visa and Mastercard are unlikely to be forced out. They may, however, need to adapt to mounting political and regulatory pressure. Intervention by governments could drive greater localisation of processing within the UK and Europe, with the technology and intellectual property rights to operate schemes more locally, while remaining aligned to the global networks. Such a shift would allow governments to address sovereignty concerns while preserving the benefits of globally integrated payment networks.

The ambition to develop credible alternatives is justified. The belief that they will meaningfully supplant existing schemes is less convincing. For Visa and Mastercard, adaptation seems far likelier than eviction.
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