Britain's government has put forward Visa, Mastercard and a range of interbank systems such as Bacs and Chaps to be supervised by new incoming watchdog to ensure they deliver competitive rates.

Whitehall said in a statement that when the new Payment Systems Regulator comes into force from April next year, the main objective will be to ensure enhanced competition in the sector.

"An open and transparent payments system is crucial to give new players freedom to challenge the big banks without unfair barriers, and encourage new, innovative ways for customers to make payments," said Andrea Leadsom, junior finance minister.

The new regulator will hone in on establishing payments systems that allow new entrants access on fair terms to the market while also making sure that incumbent services are competitive.

It will even have the power to order a break up of a company if it deems firms to be uncompetitive.

Britons currently only use Visa and Mastercard when it comes to all debit card transactions.