The rise of domestic card schemes – taking back control of payments?

The rise of domestic card schemes – taking back control of payments?

Jean Sideris
July 3, 2023

Whilst the rise of international card schemes (ICSs) such as Visa and Mastercard transformed the global landscape of electronic payments, gradually supplanting domestic schemes that once dominated various regions, an opposite trend has emerged in more recent years. The historical consolidation of payment networks – driven by factors such as economies of scale, convenience, advancements in technology, and demand for interoperable cross-border transactions – is currently going through a new era of geopolitical-driven transformation.

1. Historical growth of ICSs

Domestic payment schemes such as Switch in the UK, PIN in the Netherlands, Laser in Ireland, or Pankkikorti in Finland played a vital role in facilitating transactions within their respective countries. However, as globalisation gained momentum, the limitations of these domestic schemes became apparent. Local regulatory constraints as well as the need for interoperability and acceptance of cards across borders led to an increasing number of domestic schemes being replaced by ICSs, which offered a standardised payment infrastructure capable of processing transactions worldwide. Over the years, ICSs like Visa and Mastercard have experienced remarkable growth. Their networks have expanded exponentially, encompassing a vast number of financial institutions, merchants, and cardholders globally.

This growth was fuelled by the increasing adoption of electronic payments, the emergence of ecommerce, tokenised tap-and-go solutions, and the convenience offered by card-based transactions. As a result, Visa and Mastercard have become branded with secure, reliable, and universally accepted payment solutions.

More recently, the drive for innovation and faster payment solutions has led ICSs to explore opportunities in the realm of fast payments. One notable example is Mastercard's acquisition of Vocalink, a leading provider of real-time payment technology. This strategic move has allowed Mastercard to enhance its capabilities in instant payments and provide efficient, secure, and near-instantaneous transaction processing in an era where traditional card payments and digital wallets are becoming more and more entangled.

According to a recent Nilson report, payment cards in circulation worldwide are projected to reach 28.4 billion by December 2027, up from 25.8 billion at the end of 2022.

  • ICSs are projected to reach 17.9 billion cards by the end of 2027, up from 16.6 billion at year-end 2022 (Figure 2). Global brand cards were the largest component (64%) of all payment cards worldwide at the end of last year (Figure 1), and they are projected to hold a 63% market share at year-end 2027.
  • Private label credit, debit, and prepaid products, which are usable only at specific retail stores, fuelling stations, airlines, and other outlets, are the second largest component of the global total. Collectively, these cards are projected to reach 8.4 billion worldwide and hold a market share of 30% at year-end 2027.
  • There are more than 90 domestic-market only brands worldwide, the largest being RuPay (India), Elo (Brazil), Mir (Russia), and Shetab (Iran), and they are projected to reach 2.1 billion cards and 7.5% market share worldwide by the end of 2027.
Figure 1: Payment cards in circulation globally
Figure 2: Forecasted payment cards in circulation

2. Growing domestic initiatives

However, the operations of ICSs have not been without challenges. Required to comply with US and international regulations and promote ethical business practices, Visa, Mastercard, and other ICSs have had to navigate complex geopolitical landscapes. This has led to the closure of operations in countries subject to economic sanctions, such as Russia, Iran, and Belarus.

Consequently, over the last decade, and as a result of growing concerns on domestic payments sovereignty, potential US sanctions, and increasing ICSs fees, several countries have supported or mandated the creation of domestic payment schemes to foster competition, defend national interests, ensure data security, and maintain control of payment systems within their own jurisdictions. Such initiatives work with local financial institutions and merchants to establish reliable and inclusive payment ecosystems that consider local economics, language, and cultural preferences.

These initiatives have flourished over the last few years across multiple geographies, including both card schemes such as Troy in Turkey, Mir in Russia, Elo in Brazil, RuPay in India, meeza in Egypt, and mada in KSA, as well as digital instant payment solutions such as iDEAL in the Netherlands, Swish in Sweden, PromptPay in Thailand, UPI in India, and the recently announced IPP in the UAE, or even sometimes combining both cards and instant payments under an integrated platform such as InstaPay in Egypt.

According to a recent study conducted by Juniper research, the number of consumer instant payments is projected to surpass 235 billion by 2027, growing from 74 billion in 2023 (Figure 3). The adoption of instant payments among consumers is expected to expand rapidly, accounting for approximately 70% of all global transactions by 2027, up from slightly over 30% in 2023.

Figure 3: Forecasted instant payment transactions

Fuelled by the growth of domestic card and/or instant payment schemes, cross-border initiatives aiming at linking them together have significantly picked up steam in recent years:

  • One notable example is Project Nexus, an initiative launched by the Bank for International Settlements (BIS). Project Nexus aims to explore and develop global standards for fast and efficient cross-border payments by linking domestic instant payment systems. By fostering collaboration among central banks and payment service providers, Project Nexus seeks to address the challenges associated with cross-border payments, such as high costs, long processing times, and lack of transparency.
  • Similarly, in Africa, the Pan-African Payment and Settlement System (PAPSS) is making significant strides in promoting cross-border financial transactions. PAPSS, established by the African Export–Import Bank, seeks to harmonise instant payment systems across the African continent. The initiative aims to reduce reliance on international currencies and enhance intra-African trade by facilitating seamless and cost-effective cross-border payments within Africa.
  • The Discover Financial Services Network Alliance is another cross-border initiative that focuses on enhancing card payment acceptance and interoperability globally. Discover Financial Services, a major global card network, has partnered with various local card schemes worldwide to expand acceptance and enable cross-border transactions. By leveraging bilateral agreements with local card schemes, the network alliance aims to provide convenient and efficient payment solutions for businesses and consumers across borders.
  • Lastly, the Single Euro Payments Area ‘SEPA’ Instant Credit Transfer is a European initiative that enables near real-time cross-border payments in euro within the SEPA zone. It offers businesses and individuals a faster and more accessible way to transfer funds across borders. The SEPA Instant Credit Transfer scheme aims to enhance payment integration and promote the harmonisation of payment services across the European Union.

These cross-border initiatives, along with various bilateral agreements between domestic schemes, demonstrate the increasing recognition of the need for efficient and interconnected payment systems on a global scale. Through collaborative efforts and innovative solutions, these initiatives strive to compete against ICSs on cross-border transactions, driving economic growth and fostering financial inclusion worldwide.

3. Recent European initiatives

The European Payments Initiative (EPI) is a newly proposed initiative in Europe aimed at unifying instant payments across the region. This initiative has the potential to significantly impact the expansion of global payment schemes such as Visa and Mastercard. EPI's ambition is to create a unified pan-European payment solution based on SEPA Instant Credit Transfer ‘SCT Inst’, offering a bank card to consumers and merchants across Europe, a digital wallet, and peer-to-peer (P2P) payment solutions. The solution aims to become a new payment standard for European consumers and merchants for all types of transactions, including in-store, online, cash withdrawal, and P2P.

A commercial launch will take place in 2024 in Belgium, France, and Germany before extending to other European countries, as these three countries account for more than half of non-cash retail payments in the Eurozone. Initially, this will involve a person-to-person digital wallet – under a single European brand – for all everyday payment uses, which will be enhanced by other innovative services to improve the customer experience. The target will also be extended to personal-to-professional payments, online purchases, and then point-of-sale payments. In France, the implementation of this payment solution will draw on more than 30 million subscribers alone. The EPI initiative will mainly affect domestic and pan-European transactions, as cross-border transactions have been traditionally led by international schemes.

The SEPA Payment Account Access (SPAA) scheme is another initiative by the European Payment Council (EPC) that is intended to standardise data exchange between various financial institutions and payment providers. It will allow merchants to accept payments by bypassing the card rails – and provide consumers with value-added financial services (Banking-as-a-Service, lending, account aggregations, etc.). The SPAA Scheme defines the rules, practices, and standards that allow for the exchange of payment account-related data and the initiation of payment transactions in the context of advanced, client-server-based API services provided by Account-Servicing Payment Service Providers (ASPSPs) to Third-Party Providers (TPP). The scheme is designed to enhance interoperability, efficiency, and customer-centricity in the payments industry. It empowers TPPs to access payment accounts with customer consent, fostering competition and driving innovation.

By leveraging Open Banking and standardised protocols, these initiatives aim to streamline payment experiences while addressing the limitations and complexities associated with traditional local and international card schemes.


In summary, the historic rise of ICSs like Visa and Mastercard which faced limited competition on international cross-border transactions is being increasingly challenged by domestic initiatives that aim at disrupting the status quo by linking up and carrying out cross-border payments. Whilst the most successful initiatives often surfaced in emerging and/or non-Western economies, supported by strong regulation and/or mandates, European players have consistently failed to develop a real tangible alternative to US-based ICSs, despite many attempts. It remains to be seen whether EPI or SPAA will finally bring about a means for Europe to reduce its reliance on international card schemes for cross-border payments.

This article was first published by The Paypers, the Netherlands-based independent source of news and insights for professionals in the global payment and e-commerce community.

The content of this article does not reflect the official opinion of Edgar, Dunn & Company. The information and views expressed in this publication belong solely to the author(s).

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