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MasterCard is to take over VocaLink in a £700m acquisition that will help it diversify beyond cards in the rapidly changing UK payments industry.
The deal was first mooted in March after 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.
Services run by London-based VocaLink include BACS, Faster Payments and the UK ATM network 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.
In 2015, VocaLink reported revenues of £182m as it processed more than 11 billion transactions.
“We are excited about the opportunity to play a bigger role in payments in the UK – a very strategic market for us,” said Ajay Banga, CEO at MasterCard.
“VocaLink is a unique company with outstanding technology, assets and people. We look forward to investing in and maximising the technology, and embedding it in our products and solutions, both in the UK and around the world.”
Speaking to Computer Weekly when MasterCard was first revealed to be a VocaLink suitor, Celent analyst Gareth Lodge said MasterCard needed to find ways to grow its business, particularly as almost all major banks have debit cards with its main competitor, Visa.
Read more about UK payment systems
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- The Financial Conduct Authority is planning to open up the payments sector to new companies to improve competition.
Lodge said taking over VocaLink would help MasterCard diversify beyond cards, with real-time payments being “the jewel in the crown”.
He said the entire card industry is at risk of losing business with the European Commission’s Payment Service Directive 2 introducing a rule that will allow third parties, such as large retailers, to go directly to banks for money owed by customers.
After a report was published in March that included a call for banks to sell their shares in VocaLink, PSR managing director Hannah Nixon said: “The payments industry has evolved at a steady pace, but now is the time to ask whether or not it is operating best practice.
“The evidence we have gathered shows that common ownership is hampering competition and the speed of innovation in the market.” .......................................................