MasterCard Incorporated has announced that it has entered into a definitive agreement to acquire 92.4 percent of VocaLink Holdings Limited for about £700 million (approximately US$920 million), after adjusting for cash and certain other estimated liabilities. VocaLink’s existing shareholders have the potential for an earn-out of up to an additional £169 million (approximately US$220 million), if performance targets are met. This transaction is subject to regulatory approval and other customary closing conditions.

Payment systems covered

VocaLink operates key payments technology platforms on behalf of UK payment schemes, including:

• BACS – the Automated Clearing House (ACH) enabling direct credit and direct debit payments between bank accounts
• Faster Payments – the real-time account-to-account service enabling payments via mobile, internet and telephone
• LINK – the UK ATM network

In addition, VocaLink offers innovative products with global potential, including ZAPP, a mobile payments app that leverages Fast ACH technology, and licenses its software and provides services to support ACH activities in Sweden, Singapore, Thailand and the United States. In 2015, the company reported revenues of £182 million as it processed more than 11 billion transactions.

New MasterCard Strategy

This acquisition accelerates MasterCard’s efforts to be an active participant in all types of electronic payments and payment flows and to enhance its services for the benefit of customers and partners. It will allow MasterCard to play a more strategic role in the UK payments ecosystem, while bringing the innovation and knowhow from across the globe back to VocaLink’s home market. The result will be even more choice in how consumers, merchants and governments make and receive payments.

“We’re excited about the opportunity to play a bigger role in payments in the UK, a very strategic market for us,” said Ajay Banga, president and CEO, MasterCard. “VocaLink is a unique company with outstanding technology, assets and people. We look forward to investing in and maximizing the technology, and embedding it in our products and solutions, both in the UK and around the world.”

The UK Payment Systems Regulator said: “On the acquisition, we will discuss developments with MasterCard and Vocalink and, where appropriate, with the relevant merger authority. Our main consideration is that the infrastructure delivers good outcomes for the people and businesses that use it.”

MasterCard believe this will be the first true combination of the traditional person-to-merchant cards business with a clearing business, which when fully developed, presents an additional opportunity to make a deeper and sustained shift from the use of cash and checks in business, government and personal payments.

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CTMfile take: This move by MasterCard is important, it could change the face of payment systems world-wide if MasterCard manage to roll-out the Vocalink systems and technology to many of the countries where they operate. It will definitely accelerate the roll-out of Faster Payments type services world-wide. The only question is”Why was the price so low?”