OPINION: GREAT BRITISH RAILWAYS IS A CHANCE TO MODERNISE RAIL RETAIL

The creation of Great British Railways (GBR) is a once-in-a-generation opportunity to rethink how Britain’s railways work.  

If we want a competitive market where independent retailers can continue to invest, innovate and give passengers greater choice, we need the commercial systems underpinning rail retail to be fit for what is an increasingly digital industry. 

A system that ties up capital 

Under the current Rail Settlement Plan (RSP), independent retailers can be required to provide significant financial security against the money they owe to the rail industry, usually through cash or bank-guaranteed bonds. 

There is good reason for that: the industry needs protection against settlement risk. But as retailers grow, the amount of security required can grow with them, tying up capital that could otherwise be invested in technology, better customer experiences and growth. For new and growing businesses, those requirements can also make it harder to enter the market and scale. 

GBR gives us a chance to bring greater flexibility into the system, opening the door to additional settlement options that can sit alongside existing bond arrangements.  

Exploring additional settlement options  

Payment technology has moved on considerably since many of the systems underpinning rail retail were designed. 

Real-time or near-real-time settlement could provide another way of managing financial risk. One option worth exploring is the use of Virtual Credit Cards (VCCs), which operate through established card payment infrastructure and can include controls such as transaction limits and expiry parameters. 

If money can move more quickly between retailers and the rail industry, the amount outstanding at any one time can be reduced.  

That could help manage financial exposure while giving retailers greater choice in how they meet settlement requirements, rather than relying solely on capital-intensive bond arrangements. Faster settlement could also give the rail industry quicker access to funds and greater visibility of transactions, potentially improving reconciliation and administration. 

VCCs are only one potential mechanism. The key question is whether the future rail settlement framework can accommodate credible alternatives that deliver appropriate financial safeguards. 

Why this matters for passengers 

While this may sound like a technical industry issue, it ultimately affects the passenger experience. Independent retailers have helped drive innovations such as mobile ticketing, journey optimisation and split-ticketing tools that help passengers find better value. 

A settlement framework that gives retailers greater scope to invest, while lowering barriers to entry and growth, can help sustain that innovation, strengthen competition and give passengers greater choice over how they buy and manage their journeys. 

Test, learn and build the evidence 

The Department for Transport (DfT), Rail Delivery Group (RDG), independent retailers and payment providers should work together to assess the commercial and operational case for alternative settlement arrangements, including their implications for financial risk, capital requirements, cash flow and operational efficiency. 

If that case stands up, the next step should be a limited pilot with willing retailers, running alongside existing arrangements. This would allow the industry to evaluate costs, settlement times, reconciliation and financial security in a real-world environment without creating unnecessary operational risk. 

As the Government builds the framework for GBR, it should avoid simply replicating existing systems. 

Great British Railways can unlock investment in rail retail 

Modernising rail should also mean modernising the commercial infrastructure that sits behind it.  

A more flexible approach to settlement, with fair and non-discriminatory access for independent retailers and appropriate financial safeguards, could help unlock investment, strengthen competition and ultimately support better services and greater choice for passengers.