Mastercard acquired a majority stake in the UK’s Vocalink nearly a decade ago to expand beyond its card-centric model. Now, the payments giant may be preparing to reverse course.
Vocalink provides the technology that supports nearly all UK payroll and government benefit payments, as well as more than 70% household bill payments. While the acquisition significantly expanded Mastercard’s global payments footprint, some UK regulators have expressed concerns about the prominent role of a U.S. company in the country’s financial infrastructure.
“Vocalink is a critical piece of payment infrastructure and the UK wishes to return control of it back to their domestic banking sector for reasons of strategic control, competition, and reducing reliance on foreign networks,” said Ben Danner, Senior Debit Analyst at Javelin Strategy & Research. “This sale would certainly be a part of a larger trend to position the UK and EU as less reliant on foreign payment companies.”
Selling Back to the Banks
DeliveryCo has emerged as a potential buyer. According to the Financial Times, Mastercard is exploring the sale of its majority stake to the bank-backed consortium, which include Barclays and Lloyds among its members.
DeliveryCo’s goal is to establish a domestic payments rail capable of competing with Mastercard and Visa by 2030. It’s an ambitious target, given that the two card networks currently facilitate roughly 95% of UK card transactions.
Seeking Payments Sovereignty
The DeliveryCo initiative represents a broader push for payments sovereignty, which has become an increasing priority in many regions. For example, the European Central Bank has outlined a roadmap to reduce the European Union’s reliance on foreign-owned payment systems.
The EU’s two-pronged strategy centers on strengthening domestic payment rails while improving interoperability with other countries’ systems, as illustrated by the recent agreement to connect India’s UPI with the EU’s real-time payments system.
Even so, Visa and Mastercard remain formidable competitors to emerging domestic payment networks. Both companies have participated in several of these initiatives, including the launch of DeliveryCo.
For Mastercard, a sale could also result in a financial loss. The company acquired Vocalink for £701 million (approximately $937 million) in 2016 and is reportedly considering selling its 51% stake for around £400 million (approximately $535 million).
