The UK government is planning to put supervision of MasterCard and Visa alongside the country's main interbank payment systems into the hands of a new Payment Systems Regulator (PSR), whose chief remit is to inject more competition into the country's payments industry.
In 2013 the government announced the creation of a new, economic regulator charged with increasing competition and innovation in the payments sector, which has traditionally been dominated by a small number of systems and the big banks.
From April next year, the PSR will have strong new powers to ensure the way the country's main payment systems are run do not hold back competition in the sector, including requiring competitors such as challenger banks and smaller firms to have access to these systems on fair terms, and if necessary the power to order the owners of the more established systems to break them up or sell them.
The PSR will also have powers to compel its charges to develop and deliver strategies that provide "genuine, timely innovation for customers".
Major credit and debit card providers, as well as the main 'interbank' systems which include Bacs, CHAPS, Faster Payments, Link and the cheque clearing system, are among the main 'payment systems' that the government is proposing to bring under the scope of the PSR from April next year.
In order for a payment system to be designated for PSR regulation, the Treasury must be satisfied that "any deficiencies in the design of the system, or any disruption of its operation, would be likely to have serious consequences for those who use, or are likely to use, the services provided by the system."
The government is consulting on its proposal to designate the systems for four weeks, after which it will make its final decision, with the regulation coming into effect by 1 April 2015.
Economic Secretary to the Treasury Andrea Leadsom says that 92% of credit and charge card transactions, and 100% of debit card transactions in Britain are made through Visa or MasterCard, while he main interbank payment systems cleared 7.3 billion items, worth over £75,687 billion last year.
"An open and transparent payments system is crucial to give new players freedom to challenge the big banks without unfair barriers, and encourage new, innovative ways for customers to make payments," she says. "Today's consultation is an important step along the road to a more competitive banking sector focused on each and every user of financial services."