Some of Britain’s largest banks are exploring the creation of a domestic payments network that could provide an alternative to Visa and Mastercard, in a move aimed at increasing competition and reducing reliance on the two dominant global card schemes.

Senior executives from major high street lenders have held discussions about the feasibility of launching a UK-based card system capable of processing debit and credit transactions independently of the international networks that currently handle the vast majority of electronic payments in the country.

The initiative reflects growing unease within the banking sector over processing fees and the concentration of market power in the hands of the US-based payment companies.

The proposal, still at an exploratory stage, would involve assessing whether existing UK payments infrastructure could be adapted to support a fully domestic card scheme.

Industry figures say that any new system would need to match the reliability, security and global interoperability offered by existing networks, while also ensuring compatibility with online, in-store and contactless transactions.

British banks have in recent years faced rising scheme fees and regulatory scrutiny over card payment costs.

Policymakers and competition authorities have also examined the structure of the card payments market, with concerns raised about limited competition and the impact of interchange and processing charges on merchants and consumers.

Advocates of a UK alternative argue that a domestic network could offer greater pricing transparency, improved bargaining power for banks and retailers, and enhanced resilience in the event of international disruptions.

However, industry experts caution that building a credible rival would require significant investment, regulatory approval and widespread adoption by merchants and consumers.

The discussions come at a time of rapid change in the payments landscape, as digital wallets, account-to-account transfers and open banking services gain traction.

Any UK card scheme would need to compete not only with established global brands but also with emerging fintech-driven solutions.

Banking leaders have emphasised that no final decision has been taken and that any proposal would undergo extensive consultation with regulators, payment providers and retail stakeholders.

For now, the talks signal a strategic reassessment of the UK’s payments architecture and the balance of power within one of the world’s most advanced cashless economies.