MasterCard's £700 million VocaLink deal in doubt on competition watchdog fears

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MasterCard’s £700 million deal to buy VocaLink, the company behind £6 trillion of payments a year, was thrown into doubt today by the competition watchdog.

The Competition and Markets Authority warned the acquisition could make the Link ATM network — from which Britons withdraw £10 billion per month from more than 70,000 free hole-in-the-wall machines — less competitive.

VocaLink and MasterCard are two of the three “most credible” technology providers to the network, the CMA warned. “As such, the merger would… limit the ability of Link to obtain good value when tendering for an infrastructure provider.”

There are already fears the UK’s number of Link ATMs will be slashed as Britons switch to contactless payments and more online shopping.

VocaLink is currently owned by 18 banks and building societies including Santander, Barclays, Lloyds Banking Group, HSBC and Royal Bank of Scotland who would share a windfall if the CMA backs MasterCard’s acquisition. 

But MasterCard already owns credit and debit card schemes Maestro and Cirrus — as well as its eponymous card — and Vocalink also operates the technology that processes some 90% of Britons’ salaries, all state benefits and more than two-thirds of household bills. It’s also behind Bacs, the clearing system allowing payments between bank accounts.

The CMA said the two companies could avoid full investigation if they respond by next Wednesday. Andrea Coscelli, acting chief executive of the CMA, added: “The Link ATM network provides an essential service for millions of customers. These concerns warrant a closer investigation [if] MasterCard cannot address them at this stage.”

When US giant MasterCard announced its VocaLink deal in July, weeks after Brexit, Chancellor Philip Hammond claimed the takeover showed “that Britain remains an attractive destination for international investors”.

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January 5, 2017 |
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