UK banks are accelerating plans for a new national payments network, provisionally named DeliveryCo, to lessen the country's significant dependence on US-based card giants like Visa and Mastercard. This initiative is primarily motivated by worries that relying on foreign systems constitutes a strategic vulnerability to geopolitical risks and supply-chain disruptions. The move is a major step towards enhancing the resilience and autonomy of the UK’s financial infrastructure.
Rationale: Strategic Vulnerability and Systemic Risk
The rationale for DeliveryCo is multifaceted. Visa and Mastercard currently process about 95% of all UK card transactions, a concentration that financial leaders view as a strategic vulnerability, especially since the infrastructure is controlled by US firms. Concerns about potential restrictions or disruption, amplified by geopolitical uncertainties, including those linked to the Trump administration, have heightened the perceived systemic risk, the possibility of a total outage severely impacting the UK economy. While recent tensions have added momentum, the core goal of a domestic system is a long-standing one, rooted in concerns over competition, resilience, and national control.
Project Scope and Key Backers
DeliveryCo is a working title for the project, which evolved from the 2024 National Payments Vision. It is intended to complement, not entirely replace, existing systems by creating a new, UK-based payment rail. This rail will offer a more resilient and domestic option for consumers, merchants, and banks. Key backers include major financial institutions like Lloyds Banking Group, NatWest, Santander UK, Nationwide, and Coventry Building Group, along with ATM operator Link, with the Bank of England providing technical blueprints. The UK government supports the project as a measure for both resilience and competition.
Future Focus: Innovation and Regulatory Alignment
The UK's initiative aligns with a global trend, mirroring efforts like the European Payments Initiative (EPI), where policymakers are seeking alternatives to US networks to guard against external leverage or sanctions, as evidenced by the suspension of Visa and Mastercard services in Russia following US sanctions. Although Visa and Mastercard have publicly welcomed the competition, proponents of DeliveryCo argue a homegrown network could deliver potential cost savings for merchants and consumers through more competitive fee structures. Building the network presents significant challenges, including substantial investment, coordination, and regulatory approval, with an operational target projected for around 2030. Initial efforts are focused on establishing the corporate and legal framework.
Beyond payment resilience, a domestic system could stimulate broader innovation in the UK financial services sector, particularly in digital payments, open banking, and embedded finance. Locally based infrastructure may also offer better alignment with UK regulatory standards and data protection requirements. The project's ultimate success will depend on overcoming complex technical challenges, such as ensuring seamless interoperability with global systems, which is crucial for international commerce and travel. DeliveryCo is being closely monitored as it seeks to address both economic security and digital finance as national priorities for the UK.
