The traditional structure by which payments are made in the UK needs to be vastly simplified, with retailers and other merchants dealing directly with customers' banks - not via "merchant acquirers" and other middlemen.
The new structure would squeeze companies like WorldPay and Visa International, which have traditionally intermediated between retailers and their customers at the point of sale (POS), unless they are able to offer valued-added services to justify their positions.
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That is the view of Consult Hyperion's David Birch, a payments technology expert and adviser on payments to the UK IT industry body Intellect.
Such a simplified structure, though, would both speed up payments and reduce retailers' costs. Banks' merchant charges are a common cause of complaint among retailers, while being paid in real time, rather than waiting up to three working days to receive payment, would enable them to drastically improve their cashflow.
Birch was speaking exclusively to Computing at the Payments Council conference in London today.
"You are beginning to see the opening shots fired in the war between the payment schemes and the banks," he said.
Retailers are questioning why they should conduct their electronic payments through the traditional payments systems, he said, which was justified in 1959 when a specialist network was required to link shops to the banking system, but not today, when everyone has access to the internet.
Merchants, he said, were asking: "Why do we need acquirers, processors, Switch, Visa, Mastercard? The merchants don't want all that stuff," said Birch.
"What they really want is, if you go into Tesco, you run your Tesco app [on your smartphone], which has all your coupons and offers. When you go to pay, you punch in your PIN and it's done.
"It goes directly through FPS [the Faster Payments System] and when you hit 'okay', there's a FPS push and the credit goes directly from your bank account to Tesco's bank account within a few micro-seconds," said Birch.
Visa and Mastercard, he concluded, "are going to have to come up with some value-added services to justify their charges because otherwise the retailers will prefer to go straight to the bank account", cutting out traditional payment processors.
