Mastercard VocaLink Acquisition Moving Forward

Mastercard’s acquisition of U.K. payments technology firm VocaLink has marked an important milestone as it attempts to gain regulatory approval for the deal.

Mastercard announced its intention to acquire a 92.4 percent stake in VocaLink Holdings Limited for about £700 million (approximately U.S. $920 million at the time). VocaLink operates key payments technology platforms on behalf of various U.K. payment schemes, including the Bacs, Automated Clearing House (ACH), Faster Payments — the real-time account-to-account service enabling payments via mobile, internet and telephone — and LINK, the U.K. ATM network.

The deal as announced was, of course, subject to regulatory approval — and the question of this week what that approval will look like.

The U.K.’s Competition and Markets Authority (CMA) has recently noted that they have some concerns regarding competition over the LINK ATM network. Specifically, the CMA noted that Mastercard and Vocalink collectively represented two-thirds of the most credible suppliers of services to LINK — meaning a merger here would drop the number of possible bidders to two when a service provider is chosen.

“The LINK ATM network provides an essential service for millions of customers,” noted CMA Acting Chief Executive Andrea Coscelli. “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.”

Mastercard, for its part, has responded optimistically to the CMA’s concerns.

“We welcome today’s decision by the CMA regarding our planned acquisition of VocaLink. 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 payment infrastructure services to Bacs or the Faster Payments Service,” Mastercard noted in a press release following the release of the CMA’s remarks.

“We’re pleased to have the opportunity to address their one concern, regarding the LINK ATM scheme, in the timeframe provided. This acquisition promises to bring greater choice and innovation to the payment ecosystem, enabling people, governments and businesses to pay the way they want to pay.”

Mastercard and VocaLink have until Jan. 11 to come up with a plan to address the concerns; if they don’t come up with one, they could be referred for an in-depth investigation.


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