MasterCard and VocaLink: Welcome to the future of card schemes?

by Sarah Grotta 0

News of a potential merger between MasterCard and Vocalink reemerged after the possible matchup first found its way to the press back in March of this year. A blog in Finextra outlines all the reasons why this combination makes tremendous business sense:

Acquiring VocaLink will make MasterCard a very different payment network. MasterCard will have the means to process a range of new transaction types and capitalize on existing VocaLink supported products such as Paym and any products in the pipeline.

The acquisition comes at a time when the Faster Payments network is growing rapidly (as of Q3 2015 annual volume and values on the Faster Payments grew by 13% and 14.6% respectively over Q3 2014) and demand for real-time payment networks is increasing around the world.

VocaLink in particular has been at the forefront of real-time network expansion in Singapore and the US where it is involved with recently launched and proposed real-time networks. While the acquisition of VocaLink in the UK does not guarantee access to other international interbank networks, it ensures MasterCard will be in a competitive position to provide real-time interbank infrastructure services around the world.

Regulatory powers may keep this merger from happening, however. VocaLink is currently owned by the major UK banks. The Payment System Regulator (PSR) in the UK is not enamored with this arrangement and is looking to break-up the banks’ ownership. The belief is that ownership by a more entrepreneurial owner or owners will ensure continued innovation and greater willingness to share these innovations across the payments industry. What is unknown is if the regulatory body sees MasterCard in that light.

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

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