For six decades, the global payments industry has been dominated by Visa and Mastercard. In 2021, the American giants had 99 per cent market share of UK debit and credit card payments.
Cue Volt. Founded in 2019, the London-based fintech start-up is building a global real-time payment network to challenge the duopoly and shift countries’ reliance on cards.
Most recently valued at more than $350m (£280m) in a 2023 funding round led by Silicon Valley investor IVP, Volt is live in 31 countries, including Brazil, Australia and the UK – where it secured a licence to offer e-money accounts earlier this year. It expects to launch in the US in June and has further ambitions in south-east Asia and Latin America.
“We have nothing but respect and admiration for Visa and Mastercard, but their technology was first designed and implemented in the 1950s – and in 2024, it’s fundamentally the same as it was 70 years ago,” co-founder and chief executive Tom Greenwood tells City A.M.
“So it’s ripe for disruption, and it is being slowly but surely disrupted.”
The future of payments
Greenwood says the two giants have little reason to immediately overhaul their technology while they continue to see strong earnings and a dominant market position.
“You can’t take a Volkswagen Kombi van from the 1960s and easily turn it into a Formula One car that Lewis Hamilton would race,” he says. “They would also be cannibalising their own revenue streams and destroying a lot of their own business if they did so.”
But they are under pressure. Not just from challengers like Volt but politicians, too. A government-backed review last November called for more competition in the payments market and innovation among firms to build an alternative to the UK’s “clunky” Faster Payment Service, which has put it “at risk of falling behind” international rivals.
“Governments and central banks no longer want to be reliant on American infrastructure or American companies,” Greenwood says. “They increasingly see payment architecture as national infrastructure, like healthcare or anything else.”
Volt is betting on open banking to spearhead the revolution. The term refers to financial institutions sharing and using data for the creation of new products. For payments, the technology can enable new routes between customers’ bank accounts and retailers that bypass card networks.
Volt has partnered with the likes of Shopify and Worldpay to enable account-to-account payments for their merchants. The process is faster than using a card because the payment is executed directly from a customer’s bank account.
Greenwood also argues that it’s safer. “You authorise it from inside your own banking environment, so someone has got to be able to either hack the bank or unlock your phone, get into your bank app and provide your face ID to confirm a transaction,” he says.
Open banking domination
More than 75 countries have rolled out domestic networks for real-time bank payments, but Britain has lagged behind others in making open banking the norm.
“It already is the norm in Brazil, China and India. In the BRIC nations, it’s already not only implemented, but it’s dominant,” Greenwood says.
“Britain’s been a modern industrialised economy for longer. Cards were the best way to do things in the 1960s, 70s and 80s, and so because of that, we’re deeply entrenched in them. It didn’t happen in a big way in some other countries, so they’ve been able to jump straight to the future.”
Closer to home, Greenwood lauds the Netherlands’ iDEAL system. Launched in 2005, it was used for 83 per cent of the country’s ecommerce transactions in 2021.
“As some maturity comes to the product, as it starts becoming more familiar, it will very quickly rise up,” Greenwood says, expecting a major realignment within the next five to 10 years.
When it comes to Volt’s own future, Greenwood says an IPO could be a possibility but that the firm is “still in start-up and scale-up mode”.
One of Volt’s main European rivals, Tink, took a different exit strategy when it was acquired by none other than Visa in 2022 for €1.8bn (£1.5bn).