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The Competition and Markets Authority (CMA) is concerned that a takeover of VocaLink by Mastercard could make it difficult for the UK ATM network Link to negotiate a good infrastructure service due to reduced competition.
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In June 2016, the Payment Systems Regulator (PSR) stated its wish for VocaLink, which is owned by a small group of big UK banks, to be sold off to increase competition in payment processing. Mastercard later emerged as the favoured acquirer in a £700m deal.
Services run by VocaLink include Bacs and Faster Payments Service (FPS), as well as Link. Through these and other services, VocaLink processes more than 90% of salaries, 70% of household bills and almost all state benefits in the UK.
Industry participants in a review of its proposed takeover by Mastercard have raised concerns including loss of competition in payment infrastructure services.
The CMA said the three most credible suppliers of infrastructure to the Link ATM network are VocaLink, Mastercard and Visa, which means the merger of two of these will reduce competition and “limit the ability of the Link scheme to obtain good value when tendering for an infrastructure provider”.
However, the CMA has not found concerns in the provision of payment infrastructure services to Bacs or FPS because there are many credible alternatives to VocaLink and Mastercard, it said.
The CMA said an in-depth investigation will be carried out if the companies cannot offer a remedy to address the concerns before 11 January 2017.
Read more about potential takeover of VocaLink
- The UK payments regulator wants banks to loosen their grip on the payments infrastructure by selling off some of their stake in it.
- Banks look set to lose their grip on payment systems because they add little more than resilience, as the new systems regulator sets out its plans in an industry consultation.
- The Financial Conduct Authority is planning to open up the payments sector to new companies to improve competition.
Andrea Coscelli, acting CEO at the CMA, said: “The Link ATM network provides an essential service for millions of customers. 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”
“These concerns warrant a closer investigation in the event that Mastercard cannot address them at this stage,” added Coscelli.
Mastercard welcomed the CMA decision in a statement: “The thoroughness of the CMA’s review reflects the significance of this deal and its potential for the industry. In its announcement, the CMA noted that it has no concerns related to providing
“We’re pleased to have the