LONDON, Nov 22 (Reuters) – Britain needs a “digital alternative” to relying on Visa and Mastercard for card payments regardless of steps being taken by regulators, a report commissioned by the government said on Wednesday.

The conclusions of the Future of Payments Review echo longstanding complaints across Europe about heavy reliance on the American duo for card payments, though calls and attempts to create a ‘home grown’ alternative have made little progress.

“While cards make a tremendous contribution to the payments landscape, we heard notable dissatisfaction with the cost of card schemes on the part of shops, services, and other merchants – which may be in part due to a lack of choice or digital alternatives to the existing card schemes,” the review said.

Britain’s Payment Systems Regulator (PSR) is reviewing the fees card schemes charge, a longstanding battle ground pitching Visa and Mastercard against ‘merchants’ charged for accepting their cards from customers making payments.

“Regardless of the outcome of the PSR’s work, we believe the market would be further improved if there was a viable digital alternative to the card schemes,” the review said.

So-called open banking, or third party fintechs using data from a customer’s bank, with permission, to offer payments services, could create a lower cost alternative to card schemes for retailers, it added.

“If choice can be created, we believe that merchant dissatisfaction will decrease.”

Open banking could also improve the currently “clunky” experience of direct consumer-to-consumer transfers, it said.

Visa welcomed the review’s conclusion saying that the UK payments landscape was in a good position. “We are keen to work with Government to ensure the UK continues to be at the forefront of payments innovation”, it said.

Mastercard said it welcomed the review’s recognition of the contribution cards make, adding that the company continuously invests in the latest and most innovative payment technologies, including open banking.

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