Global: UK Payments Initiative Launches to Challenge Visa and Mastercard Dominance

A new industry-backed payments initiative has officially launched in the United Kingdom, aiming to challenge the longstanding dominance of Visa and Mastercard by accelerating the adoption of account-to-account (A2A) payments powered by open banking.

Backed by some of the UK’s largest financial institutions, including Barclays, NatWest, Lloyds, and HSBC, the Financial Conduct Authority (FCA)-regulated scheme seeks to create a scalable alternative to card-based payments by enabling consumers and businesses to move money directly between bank accounts.

The launch follows an agreement reached in May by a coalition of 31 fintech firms, high street banks, challenger banks, and payment providers to provide initial funding for the new entity, which will be fully owned and governed by industry participants.

Other organisations participating in the initiative include Nationwide, Monzo, Revolut, Starling Bank, Santander, GoCardless, and Wise, signalling broad industry support for the effort.

The development comes amid growing scrutiny across Europe over heavy dependence on US-controlled payment infrastructure.

Visa and Mastercard currently process an estimated 95 per cent of card transactions in the UK, reflecting a level of market concentration that policymakers and financial institutions increasingly view as a strategic vulnerability.

The initiative also arrives as “Pay by Bank” services continue gaining momentum across Europe.

Industry data shows account-to-account payments now account for as much as 17 per cent of European e-commerce transaction value, with major platforms such as Amazon and eBay recently adopting the payment option.

However, the widespread use of pay-by-bank systems has largely been limited to one-time transactions, restricting their ability to compete directly with card schemes in areas such as subscriptions, recurring billing, and frictionless checkout experiences.

The UK Payments Initiative (UKPI) aims to address these limitations by introducing a common commercial framework, operational standards, and industry-wide rules that enable flexible, automated, and recurring account-to-account payments.

The framework is designed to support modern digital payment experiences while reducing reliance on card networks.

Commenting on the launch, Managing Director of the UK Payments Initiative, Richard Koch, described the development as a major milestone for the future of payments in the country.

“This marks a defining moment for the next evolution of payments in the United Kingdom,” Koch said.

“This is about creating a payment model that works better for everyone, giving people more control and reducing friction for businesses. Our commercial approach will allow us to develop from these first customer journeys to subscription models and wider ecommerce.”

In a major early rollout tied to the initiative, open banking payments provider TrueLayer announced the launch of Bank on File, a new product enabling UK consumers to authorise recurring payments directly from their bank accounts.

The solution is designed to serve as an alternative to card-on-file billing and direct debit systems, supporting payments for subscriptions, recurring purchases, household bills, and one-click checkout experiences.

By linking recurring payments directly to bank accounts, Bank on File seeks to address common payment friction points, including failed transactions caused by expired cards, fraud linked to stolen card details, and customer churn resulting from payment disruptions.

Several organisations, including Trading 212, IG Group, InvestEngine, and East Lothian Housing Association, are among the first businesses to adopt the new payment capability.

Industry observers say the launch represents an important test of whether open banking infrastructure can evolve beyond one-time payments into a full-scale competitor to traditional card schemes.

The first phase of adoption will focus on recurring payment use cases, while future rollouts are expected to expand into subscriptions, memberships, and frictionless e-commerce checkout experiences.

If successful, the initiative could accelerate the transition of pay-by-bank from a niche payment option into a mainstream payment network capable of reshaping digital commerce in the UK and beyond.