Steven Hatton - Trusek Ltd - Amersham 21 July, 2016, 14:44 4 likes

How can MasterCard's acquisition of a payment service that could, under PSD2, provide direct competiton to the card schemes be possibly thought of as increasing competition?

Or am I missing something?

Craig Lawrance - Starkspur Ltd - Chalfonts 21 July, 2016, 15:33 2 likes

@stevenHatton, I'm thinking the same way, it flies in the face of where the regulators are urging the payments industry to go.  Something as key as our national payments processor, responsible for the majority of monthly salary payments, now owned by a Card Scheme.

Ganesh Vaidyanathan - Self employed - Croydon 21 July, 2016, 15:43 1 like

This is a tremendous coup for MasterCard. Such a strong play in the direct payments space will be a huge asset at a time when the traditional interchange model for cards comes under increasing pressure from retailers and regulators around the world. It also helps them in the Debit segment where they are non-existent in the UK.

In the last few years, MasterCard has transformed itself from being a card scheme to a technology organisation. Their deep pockets and willingness to invest bode well for Vocalink and the UK payments infrastructure.

A Finextra member 21 July, 2016, 17:00 0 likes

I can't believe a piece of essential national infrastructure is sold so care-free.  Will MasterCard Access Prepaid Worldwide merge with VocaLink to rationalise processing and business units, perhaps?

Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 21 July, 2016, 17:21 0 likes

MasterCard will need some major getting used to with the drastic difference between its own and VL's revenue models: As against ~1% that MC must be making on cards, VL's figure is only 0.003% (£182 million revenues on £6 trillion transaction values).

Nick Collin - Collin Consulting Ltd - London 22 July, 2016, 10:45 1 like

I agree with Ganesh.  This is a really smart move by MasterCard.  £700 million looks like a bargain.  I've always thought that much more could be done on the back of Faster Payments and MasterCard is probably just the right sort of company to do it - my guess is that new added value products will turn out to be the main revenue drivers in the longer term Ketharaman.  Branding will be interesting!

Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 22 July, 2016, 11:20 1 like

@NickCollin: It was early 2007. At a Top 5 UK Bank that had just started implementing FPS, we were discussing various ways - including value added products - to monetize FPS. As a marketing professional, I feel disappointed that, 9 years later, not one of them has fructified into an incremental source of revenue. Although I no longer have any vested interest, at least for old time sake, I'd be very happy if your prediction "MasterCard is probably just the right sort of company to do it" comes true!

Tom Hay - Payment Systems Europe - London 22 July, 2016, 14:21 2 likes

While the high street banks were in control of Vocalink there was little incentive for them to make access to the clearings easier, because they derive a revenue stream from smaller banks that connect indirectly (via the member banks). The limited technical performance of those indirect connections meant that smaller banks could not offer the same quality of service that member banks can.

Mastercard do not have any such conflict of interest. Their revenues will depend on the number of banks connected and the volume of payments made, so they will have an incentive to get more banks on board with high speed connections and innovative services to encourage customers to make more electronic transactions.

The Mastercard acquisition could provide a shot in the arm for access to clearings, innovation and hence competition.

Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 22 July, 2016, 18:28 0 likes

@TomHay's predications may well come true but here's an alternative scenario: MasterCard leverages VL's existing relationships with consumers to move bill payments to credit cards and with corporates to move vendor payments to p-cards. This will help MC - and the card issuing banks - make more revenues.

Ganesh Vaidyanathan - Self employed - Croydon 22 July, 2016, 18:35 0 likes

Time will tell Ketharaman but I feel that is unlikely. I expect MasterCard to leverage Vocalink to develop a complementary business model and a parallel revenue stream.

Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 22 July, 2016, 18:45 0 likes

@GaneshVaidyanathan: I'd feel more confident about that prediction if the difference in yield between MC's and VL's business models is not as drastically different as 1% versus 0.003%. But time - and MC's shareholders - will tell...

Ganesh Vaidyanathan - Self employed - Croydon 22 July, 2016, 18:52 0 likes

@Ketharam Swamimathan: that is where the complementary business model is key. MasterCard could for instance package and licence the technology and make a killing on licence fees. After all, the technology has already been deployed in Singapore. Remittance is another area where MasterCard could have a significant play with this technology. As you say, time and shareholders will tell.

Tom Hay - Payment Systems Europe - London 22 July, 2016, 22:46 1 like

There's an interview here with Michael Miebach, Mastercard’s Chief Product Officer, that aligns with my predictions. For example he highlights: 

…capability to leverage Fast ACH technology for digital debit payments through its Zapp mobile payments app…

and says:  

 VocaLink will provide Mastercard with a complementary set of technology will enable it to participate in a much broader range of payment flows. “And it will allow us to continue to grow our services business across their customer base and their payment flows and vice versa for their services business”

Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 23 July, 2016, 12:01 0 likes

True that but the line “And it will allow us to continue to grow our services business across their customer base" from the same interview also aligns with my prediction "MasterCard leverages VL's existing relationships with consumers to move bill payments to credit cards and with corporates to move vendor payments to p-cards."!

Anish Kapoor - AccessPay - Manchester 16 August, 2016, 09:23 0 likes

The proposed sale of Vocalink to MasterCard, threatens to kill innovation in UK Payments – This is my damning verdict. I've put some thought into this whole acquisition and my reasoning for the above statement into a Finextra blog post. Read it here: Selling VocaLink to MasterCard will Kill Innovation in UK Payments.