Mastercard Moves Closer to Finalizing VocaLink Deal
A lone concern by the U.K. Competition and Markets Authority (CMA) regarding Mastercard buying VocaLink appears to be nearing resolution, thus paving the way for the card network’s acquisition of the U.K. transaction processor.
Earlier this month, the CMA determined that Mastercard and VocaLink represent two of the three most credible providers of infrastructure services to the LINK ATM network, and the acquisition of VocaLink would reduce the number of providers, potentially preventing LINK from receiving competitive proposals for infrastructure services. VocaLink’s technology supports the British direct debit and credit payments system, as well as the LINK ATM network and the Faster Payments Scheme (FPS) for real-time mobile and Internet payments. Mastercard and VocalLink were given until Jan. 11 to address the concern.
The CMA announced Jan. 18 that Mastercard and VocaLink proposed solutions to reduce the cost to LINK of switching from VocaLink to alternative suppliers of infrastructure services. The proposals, or modified versions of them, could remedy its competition concern, the CMA added. The proposals include:
- VocaLink making its connectivity infrastructure available to a new supplier of infrastructure services to LINK, which could enable a competitor to use VocaLink’s connectivity to members of the LINK ATM network, rather than having to build their own.
- VocaLink transferring or licensing to LINK the intellectual property rights relating to the LINK LIS5 messaging standard, which members of the network use to communicate when customers use cash machines.
- VocaLink contributing to LINK members’ switching costs.
“We are pleased that the [CMA] accepts our proposed remedies, in principle,” according to a Mastercard statement. “We look forward to working with the CMA to conclude their review, and hope to finalize this process as early as possible in the spring.”
The CMA has until March 15, 2017, to determine whether to accept the proposals; however, the CMA can decide to extend the deadline to May 20, if it deems it necessary.