UK explores new payment system as alternative to Visa and Mastercard

The UK government is taking significant steps to challenge the dominance of global giants Visa and Mastercard by exploring a new, independent domestic payment system. This initiative aims to increase competition within the financial sector, potentially lowering transaction fees for small businesses and providing consumers with more choice in how they manage their money.

For the thousands of Turkish business owners in London, particularly those running restaurants, supermarkets, and service businesses in Enfield, Haringey, and Hackney, this move could represent a major shift in their daily operations and profit margins.

Breaking the duopoly

Currently, Visa and Mastercard account for the vast majority of card payments in the UK. The Treasury and the Payment Systems Regulator (PSR) are concerned that this "duopoly" limits innovation and keeps costs high for merchants.

• Lower Fees: The proposed system would leverage "Open Banking" technology to allow direct bank-to-bank transfers at the point of sale, bypassing the high interchange fees associated with traditional card networks.

• Economic Sovereignty: By creating a homegrown alternative, the UK aims to strengthen its financial infrastructure in the post-Brexit landscape, ensuring local businesses in Barnet and Islington are less dependent on American-led financial systems.

• Innovation: The new framework is expected to encourage tech startups in Camden and Westminster to develop faster, more secure payment apps for the general public.

Benefits for the Turkish community

The Turkish-speaking business community is a vital part of the London economy. In boroughs like Waltham Forest and Newham, where small and medium-sized enterprises (SMEs) thrive, the cumulative cost of card processing fees can reach thousands of pounds annually.

"Reducing these hidden costs would allow us to reinvest more into our staff and our local neighborhoods," says a shop owner in Southwark. "Whether you are shopping in Tower Hamlets or Greenwich, a cheaper payment system benefits both the merchant and the customer."

The road to implementation

While the project is in its early stages, the government is consulting with major banks and retail associations across the country. There are also discussions about how this system could facilitate easier international transfers, which would be of great interest to those in Lambeth and Lewisham who regularly conduct business or send remittances abroad.

As the UK moves toward a more digital-first economy, the success of this "Mastercard alternative" will depend on its ease of use and the security it provides to the millions of shoppers across London.