“MasterCard’s acquisition of VocaLink has created a new payments powerhouse in Europe and beyond, and represents a win-win for both companies.
VocaLink knows that payments processing is a scale game, and having a virtual monopoly in the UK, the only way to drive further scale is to pick up volumes in mainland Europe and beyond.
For MasterCard the rationale is twofold.
The first is VocaLink’s Immediate Payments System, which is live in Singapore and forms the basis of VocaLink’s solution for US Faster Payments. This gives MasterCard a presence in non-card payments, and its global reach and network of banks would drive a level of market penetration that VocaLink could never achieve alone. Mastercard is now well placed to offer a pan-European Instant Sepa Credit Transfer (SCTinst) service, bypassing national clearing houses.
The second jewel in the crown is the Zapp system. Zapp has been struggling to achieve ignition, and MasterCard’s backing could provide the boost that it needs to get it across the line. This would give MasterCard a new route into UK debit payments, which Visa has dominated for years now. The concept could also be rolled out in Europe, giving MasterCard a dominant position in alternative (non-card) retail payments and potentially relieving the downward pressure on card fees that would result from other players offering alternative payments.
As real-time payments become “the new normal” we may finally be seeing the convergence of card payment networks with non-card payment networks. A global MasterCard network offering real-time payments of both types is a force to be reckoned with.”