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01.04.17

U.K. Competition Authority Raises a Concern about Mastercard/VocaLink Deal

traffic-cone-icon_construction_cautionThe U.K. Competition and Markets Authority (CMA) is worried that Mastercard’s billion-dollar deal to acquire VocaLink could hinder competition, and the CMA is giving the two companies until Jan. 11 to address a concern or face an “in-depth investigation,” according to the authority.

Although several concerns were raised by industry players concerning the acquisition announced last July, the only sticking point revolves around the LINK ATM scheme, the CMA noted. VocaLink’s technology supports the British direct debit and credit payments system, as well as the LINK ATM network and the Faster Payments Scheme (FPS) for real-time mobile and Internet payments. The CMA determined that Mastercard and VocaLink represent two of the three most credible providers of infrastructure services to the ATM network, and the acquisition of VocaLink would reduce the number of providers, potentially preventing LINK from receiving competitive proposals for infrastructure services.

“The LINK ATM network provides an essential service for millions of customers [and] it’s important that LINK has a good choice of providers when it comes to supplying the necessary infrastructure so it can take advantage of the opening up of payment systems to competition,” said Andrea Coscelli, CMA acting chief executive. “These concerns warrant a closer investigation in the event that Mastercard cannot address them at this stage.”

The payments industry raised additional concerns about a possible lack of competition in payment infrastructure services for automated clearing system Bacs and FPS; however, the CMA determined these to be non-issues because of the “many credible alternatives to VocaLink and Mastercard,” according to an announcement.

“The thoroughness of the CMA’s review reflects the significance of this deal and its potential for the industry,” according to a Mastercard statement. “We’re pleased to have the opportunity to address their one concern, regarding the LINK ATM scheme, in the timeframe provided. This acquisition promises to bring greater choice and innovation to the payment ecosystem, enabling people, governments and businesses to pay the way they want to pay.”

The U.K.’s Payments Systems Regulator (PSR) last month proposed two measures to address competition pertaining to the region’s payments systems infrastructure. The proposals included requiring a competitive process enabling infrastructure providers with different technology to enter the market and drive new and innovative products and services, and adopting a common international messaging standard for Bacs and FPS to lower barriers and encourage new market entrants. The PSR also acknowledged that Mastercard’s pending acquisition of VocaLink “could address the issues … causing a restriction of competition currently.”

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