Mastercard Wins U.K. Approval for VocaLink Buy
The U.K.’s Competition and Markets Authority (CMA) gave its blessing April 11, enabling Mastercard to complete its acquisition of 92.4 percent of VocaLink Holdings for $920 million. The deal, which is expected to close within weeks, gives Mastercard control of a large portion of the U.K. transaction processing market. The technology of VocaLink, a bank-owned consortium, supports the British direct debit and credit payments system, as well as the LINK ATM network and the Faster Payments Scheme for real-time mobile and Internet payments.
Before the deal could be finalized, a lone concern by the CMA had to be addressed. In January, the authority 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. The acquisition was green-lighted when the CMA approved Mastercard and VocaLink proposals that include:
- VocaLink making its existing network connectivity 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 its own;
- VocaLink transferring 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; and
- Mastercard contributing to the cost to LINK members of changing to a new supplier of infrastructure services to LINK.
The acquisition is a “game-changer” and potential disruptor in the payments landscape because Mastercard will be the first network to offer customers a “one-stop shop” for all bank account- and card-based payment services, according to Michael Miebach, Mastercard chief product officer. “For 50 years, we have perfected retail payments across channels, but payments between people (P2P) and between businesses (B2B) are growing rapidly,” he tells Paybefore. “With VocaLink’s technology alongside cards, we can provide greater choice, efficiency and convenience for paying or getting paid.”
Meibach says the deal also has implications for fintech, startups and governments, too. With the demand for immediate payments growing, “we will help scale their innovative real-time, or fast ACH, payments technology to even more markets. For many players in the space, the immediate account-to-account payments capability will unlock tremendous innovation potential,” he says.