Selling VocaLink to MasterCard Will Kill Innovation in UK Payments

by Sarah Grotta 0

Last month MasterCard announced it had reached an agreement to buy VocaLink, known for building faster payments platforms, running the UK ATM network Link and the UK’s version of ACH, BACS, plus other assets. Strategically, this makee tremendous sense as MasterCard, now known as Mastercard, de-emphasizes the card transactions in their business. The reason that Mastercard could even consider buying most of VocaLink is because the UK Payments Systems Regulator determine that the banks that owned VocaLink were stifling its creativity and blocking competition.

An opinion piece in Banking Technology contends Mastercard isn’t the answer:

Why should you be concerned about MasterCard buying VocaLink?
When you take into account that 90 per cent of salaries, over 70% of household utility bills and almost all UK state benefits are paid through the VocaLink managed UK payments infrastructure, it is understandable why some commentators within the UK payments landscape are a little concerned.

There is a degree of skepticism amongst payment industry experts, in particular payment software providers that single ownership of the UK’s payments systems could lead to an adverse impact on the country’s payments market – a direct contradiction to the problems PSR believes will be alleviated from a change in ownership.

On an additional note, how will this affect immediate payments infrastructure in Singapore, Sweden, Thailand and the US? Are payment industry experts not worried in those countries?

Is the Mastercard and VocaLink deal in danger?

Before this multimillion-pound deal is allowed to proceed, the transaction is expected come under close scrutiny from the UK and international merger authorities, regulators and a number of jurisdictions from whom anti-trust clearance will be required.

Overview by Sarah Grotta, Director, Debit Advisory Service at Mercator Advisory Group

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