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What is the UK's New Payment System Initiative?
British banks are urgently developing a sovereign payment system to reduce the United Kingdom's overwhelming dependence on American payment networks Visa and Mastercard, driven by growing concerns that former President Donald Trump could potentially disrupt these critical financial systems. With approximately 95% of all UK card transactions currently processed through these US-owned networks, financial leaders warn that the country faces significant vulnerability if access were suddenly restricted. The initiative, known as DeliveryCo, represents one of the most significant financial infrastructure projects in recent British history and aims to create a domestic alternative that could process up to 50 billion annual transactions by 2030.
Why Are British Banks Creating an Alternative Payment System?
The urgency behind this initiative stems from multiple converging factors that have raised alarm bells across the UK financial sector. First and foremost is the geopolitical landscape, where the potential return of Donald Trump to the White House has created concerns about the weaponization of financial infrastructure. As one banking CEO anonymously told The Guardian, 'If Mastercard and Visa were switched off, we'd go back to the 1950s. Of course we need a sovereign payment system.'
The Stark Reality of UK Payment Dependence
Current statistics reveal the extent of Britain's vulnerability:
- 95% of all UK card transactions flow through Visa or Mastercard networks
- Approximately £249 billion was spent via credit cards in 2024 alone
- 65% of UK adults (35.3 million people) own credit cards
- There are 59 million credit cards currently in circulation
This overwhelming dependence creates what financial experts call a 'single point of failure' in the UK's economic infrastructure. The situation mirrors concerns in the European Union payment sovereignty debate, where politicians have warned about similar vulnerabilities.
How Will the New Payment System Work?
The DeliveryCo project, chaired by Barclays UK chief executive Vim Maru, involves a consortium of major British financial institutions including Barclays, Lloyds Banking Group, NatWest, Santander UK, and Nationwide Building Society. What makes this initiative particularly noteworthy is that Visa and Mastercard themselves are participating in the funding group, suggesting a collaborative rather than confrontational approach to payment resilience.
Key Features of the DeliveryCo System
The new sovereign payment system aims to provide several critical advantages:
- Domestic Control: UK-based oversight and decision-making authority
- Operational Resilience: Ability to function independently of international networks
- Competitive Pressure: Creating alternatives to reduce transaction fees
- Strategic Autonomy: Protection against geopolitical financial weaponization
The Bank of England is developing infrastructure blueprints for the system, which will operate alongside existing networks rather than replacing them entirely. This approach mirrors successful models seen in other countries, particularly India's Unified Payments Interface (UPI), which has dramatically reduced foreign payment network dependence while maintaining global interoperability.
European Parallels: The EU's 'Airbus for Payments'
The UK initiative is part of a broader European movement toward payment sovereignty. French politician Aurore Lalucq, chair of the European Parliament's economic and monetary committee, has been particularly vocal about the need for European alternatives. 'Visa, Mastercard ... the urgent problem is our payment system. Trump can cut everything off,' she warned recently. 'The rest is poetry. I urgently request the Commission to set up a European Airbus for payment systems: you cannot say you were not warned.'
This European push reflects growing recognition that financial sovereignty begins with payment independence. The EU digital euro project represents another parallel initiative aimed at reducing dependence on foreign payment systems, though it faces different technical and political challenges.
Timeline and Implementation Challenges
The DeliveryCo system has an ambitious target of becoming operational by 2030, but several significant challenges must be overcome:
| Challenge | Description | Potential Solution |
|---|---|---|
| Technical Infrastructure | Building systems capable of handling 50+ billion transactions annually | Leveraging existing UK payment infrastructure with upgrades |
| Industry Coordination | Getting competing banks to collaborate effectively | Government-backed coordination through UK Finance |
| International Interoperability | Maintaining global payment connectivity | Partnership with existing networks like Visa/Mastercard |
| Consumer Adoption | Getting merchants and consumers to use new system | Gradual rollout alongside existing payment methods |
The project's success will depend heavily on the continued support of both the financial industry and government regulators. The Bank of England's monetary policy framework will play a crucial role in ensuring the system's stability and integration with broader financial infrastructure.
Geopolitical Implications and Global Context
The UK's move toward payment sovereignty reflects a broader global trend of nations seeking greater control over critical financial infrastructure. The Russian experience, where Visa and Mastercard were forced to cease operations following sanctions, serves as a cautionary tale for many countries. This has prompted not just European nations but countries worldwide to reconsider their dependence on US-controlled payment networks.
Financial analysts note that while complete decoupling from global payment networks is neither practical nor desirable, creating domestic alternatives provides crucial resilience. As one industry expert explained, 'It's about having options. If the primary system becomes unavailable for any reason—whether technical failure, cyberattack, or geopolitical pressure—having a sovereign alternative ensures economic continuity.'
Frequently Asked Questions
What is DeliveryCo?
DeliveryCo is the working name for the UK's new sovereign payment system initiative, a consortium of major British banks and financial institutions developing a domestic alternative to Visa and Mastercard networks.
Why is the UK creating its own payment system?
The primary motivation is reducing vulnerability to potential disruption of US-controlled payment networks, particularly amid concerns about geopolitical tensions and the possible weaponization of financial infrastructure.
Will Visa and Mastercard still operate in the UK?
Yes, both companies are participating in the DeliveryCo funding group and will continue operating their existing networks. The new system is designed to provide additional resilience rather than replace current options.
When will the new system be available?
The target operational date is 2030, though some components may become available earlier as the infrastructure is developed and tested.
How will this affect consumers and merchants?
Initially, consumers likely won't notice significant changes as the new system will operate alongside existing payment methods. Over time, it may provide additional payment options and potentially reduce transaction costs through increased competition.
Sources
This article draws on reporting from The Guardian, The Independent, and GB News, along with industry analysis from UK Finance and The Payments Association. Additional context comes from European payment sovereignty discussions and global financial infrastructure trends.
