What exactly is everything else?

You will probably have seen the adverts by Mastercard – for everything else, well it’s worth considering if there is anything else. We live in strange times, when our allies are behaving like enemies and our politicians are cow-towing to extremism or simply lacking any spine to stand against it.

The UK banking system relies heavily on both VISA and Mastercard, who run about 95% of payment systems. This reliance on a now unreliable system located in the US, with a President who is plainly idiotic and may order the system be “turned off”.  It would seem that whilst both VISA and Mastercard are reassuring the UK of their commitment here and that they even welcome competition, we have seen how quickly US companies capitulate to Trump’s threats, putting up as much resistance as wet tissue paper.

I am sure you have observed the growing number of retailers that simply do not accept cash payments anymore.  According to the market review (March 2025) in 2023 a whopping 61% of all transactions were using cards, which was 86% of their total value. There are countless adverts for payment machines and the push to Apple pay – which still really relies on the credibility of your original card. The LINK system is the UK’s ATM service to Building Societies and of course we can all do bank to bank payments.

It stands to reason that card payment systems help keep the economy ticking over and working smoothly, it also explains some of the inbuilt inflationary pressures with their additional cut being taken on each of those transactions. The cost of processing is something that many businesses complain about – which costs UK businesses around £170 million more than it did 7 years ago (despite the “competition”). The research unsurprisingly concluded that VISA and Mastercard were making profits substantially above normal profit margins of competitive markets, in essence it’s a cartel of two and another example of capitalism in the extreme.

The UK and European banking system is working on alternatives, the UK somewhat slowly and of course this isn’t helped by our departure from the EU. It is likely that solutions will be derived from digital currency, stablecoin, which offers up its own challenges.

It may be worthwhile reflecting on some of your purchases when shopping online or on the high street about how your money currently moves from your account to the retailer and begin considering your own alternatives. The Government to its credit, at least has a vision for payments.

For your amusement (or mine) here is the clip from Superman 3 (1983) directed by Richard Lester where Gus Gorman (Richard Pryor) an IT hacker, learns of the rounding down that banks do. I like to think that the Banks watched this and did it themselves.

References:

PSR Market Report March 2025: https://www.psr.org.uk/publications/market-reviews/mr22110-market-review-of-card-scheme-and-processing-fees-final-report/

UK Payments Plan vision: https://www.gov.uk/email/subscriptions/single-page/new?topic_id=payments-forward-plan

VISA – Annual report: https://annualreport.visa.com/home/default.aspx

Mastercard Annual Report: https://investor.mastercard.com/financials-and-sec-filings/annual-reports-and-proxy/default.aspx

What is Stablecoin? (Bank of England): https://www.bankofengland.co.uk/explainers/what-are-stablecoins-and-how-do-they-work

Superman 3: https://www.imdb.com/title/tt0086393/?ref_=nm_knf_t_1