In its review, the CMA stated there are competition concerns with the acquisition, mainly about the impact on the Link network of ATM machines.
It found that as MasterCard and VocaLink are two of the three largest providers of payment infrastructure services, the deal would reduce the number of companies available for Link to tender as a provider. The third provider is Visa.
Andrea Coscelli, acting chief executive of the CMA, stresses how important ample competition is for the service, adding: “The Link ATM network provides an essential service for millions of customers. 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.”
However, the CMA did not pick out any issues with the way Faster Payments (FP) and Bacs would be affected, stating it has “not found concerns in the provision of payment infrastructure services to Bacs or FP, since there are many credible alternatives to VocaLink and MasterCard.”
The review raises concerns about the lack of priority given to the Link network. There might be substantial scope for development of the FP network, as the push towards real-time payments continues, but the ATM network has seen little change or innovation for a number of years.
If the regulators are seeking to encourage competition, then this needs to be an open, competitive process
- Anish Kapoor, AccessPay
Anish Kapoor, CEO of AccessPay, is critical of the announcement by the CMA, and the level of detail it has given so far.
“It would be interesting to know more about the rationale for the CMA’s decision," he says. "Stating there is adequate competition for FP and Bacs, but not for Link, does not make sense.”
The acquisition came about in the first place after concerns were raised by the Payment Systems Regulator (PSR) about innovation in the industry. As VocaLink is owned by a consortium of banks, the regulator was concerned they were not pushing for innovation or allowing new players access to the payments space.
However, it might not have been in the regulator’s plans for all these operations to be taken over wholesale by a single global company.
A spokesperson for the PSR says the completion of the merger depends on approval by the CMA, but the banks will still need to look into selling off their 85% share regardless of the outcome of the current review.
"As we stated in December, in the event that the acquisition does not complete, we intend to pursue a remedy to require the divestment of VocaLink.”
Should the acquisition go through, Kapoor is concerned about how thorough the process will be if the services come up to tender again.
“We need assurances that there will be a proper procurement process when the infrastructure for the schemes comes up for renewal," he says. "If the regulators are seeking to encourage competition, then this needs to be an open, competitive process.”
Kapoor says from his experience the level of information available to potential future tenders is limited, narrowing the possibility for new companies to compete.
“At the last scheme update meeting, it was clear that there was no specification for how the schemes should work that they could give to a supplier looking to tender for the provision of infrastructure," he says. "I don’t understand how the CMA can suggest there is a possibility for other suppliers to take on the work without this.”
To make it fairer for other, smaller companies to enter into competition against the dominant players, Kapoor says these larger companies should be made to share their infrastructure.
“I would also suggest that the CMA insists that MasterCard/VocaLink offer a wholesale service which must be made available on the same commercial terms to all bidders – including MasterCard/VocaLink – for the provision of infrastructure services," he says.
"This would facilitate more bidders and thus more competition. However, even with this it is more than likely that MasterCard/VocaLink would still be the only bidder for the Link network.”