Reports indicate that MasterCard is considering the sale of a majority stake in its UK payments subsidiary, Vocalink, to domestic British banks. This move is said to be in response to concerns over the ownership of this critical national infrastructure by a US-based corporation. Discussions within the company are reportedly at a very early stage, with no formal offer yet presented.
Vocalink operates at the heart of the UK's retail payments system, responsible for the design, construction, and operation of account-to-account payment infrastructure. According to its website, the company processes over 90% of UK salaries, more than 70% of household bill payments, and 98% of state benefit disbursements. Its network also connects over 47,000 ATMs across the country.
In 2016, MasterCard acquired Vocalink from a consortium of 18 UK banks for an initial price of £700 million (approximately $938 million at the time), with potential performance-linked earn-outs of up to an additional £169 million. The current proposed sale of a 51% stake is reportedly valued at around £400 million (approximately $535 million).
The likely buyer is believed to be DeliveryCo, an entity backed by several major UK banks and payment companies. DeliveryCo is specifically tasked with procuring and financing the UK's next-generation retail payment system. However, sources suggest that DeliveryCo is still finalizing its funding and governance arrangements, making it unlikely for any transaction to be completed before next year.
These discussions about a stake sale coincide with growing concerns from the Bank of England regarding competition in the UK's retail payments market. Currently, MasterCard and Visa dominate the vast majority of retail payments, highlighting issues of insufficient competition. Furthermore, the Bank of England fined Vocalink £11.9 million last year for failures to meet risk management and governance requirements in a timely manner.
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