MasterCard's £700 million bid to buy VocaLink has been put on hold by the UK's competition watchdog, which has told the company to offer up a remedy to cushion its concerns, or else face an in-depth antitrust investigation.

The credit card giant's planned takeover of the London-based tech firm, which handles payments between banks, has been temporarily halted by the Competition and Markets Authority over concerns that the deal would harm the competitiveness of the LINK system that runs Britain's ATMs.

"A number of industry participants have raised concerns with the transaction," the regulator said on Wednesday morning. LINK is a system that connects more than 70,000 cash machines in the UK. The CMA is concerned that, when time comes to reopen the bidding for a new provider, VocaLink and MasterCard are two of only three "credible" candidates to run the system.



VocaLink, which was formed in 2007, currently runs LINK—which operates almost every free-to-use and paid-for ATM in the UK—as well as two other vital elements of the nation's financial infrastructure: Bacs, the automated clearing house that enables direct credit and direct debit payments between bank accounts; and Faster Payments, a service that enables mobile, Internet, and telephone banking payments. It apparently processes over 90 percent of the nation's salaries, more than 70 percent of household bills, and almost all state benefits.

The CMA investigated complaints that suggested the deal could affect competition within all three systems, but only found cause for concern with the LINK aspect of the proposed acquisition. It said:

The CMA found that VocaLink and Mastercard are two of the three most credible providers of infrastructure services to the LINK ATM network operating across the UK. As such, the merger would reduce the number of bidders and limit the ability of the LINK scheme to obtain good value when tendering for an infrastructure provider. The CMA has not found concerns in the provision of payment infrastructure services to Bacs or FPS since there are many credible alternatives to VocaLink and Mastercard.

MasterCard now has until January 11 to address the competition concerns. If it fails to meet the deadline, the deal will be opened up to "an in-depth investigation," the CMA warned.

The watchdog's acting chief Andrea Coscelli, who took the decision to put the brakes on the takeover deal, said: "The LINK ATM network provides an essential service for millions of customers. It’s important that LINK has a good choice of providers when it comes to supplying the necessary infrastructure so it can take advantage of the opening up of payment systems to competition. These concerns warrant a closer investigation in the event that Mastercard cannot address them at this stage."

MasterCard noted that the CMA was "broadly happy with all elements" of the takeover bid, aside from the Link ATM issue, and that it would respond before the regulator's deadline expires.

The thoroughness of the CMA's review reflects the significance of this deal and its potential for the industry. In its announcement, the CMA noted that it has no concerns related to providing payment infrastructure services to Bacs or the Faster Payments Service. We’re pleased to have the opportunity to address their one concern, regarding the LINK ATM scheme, in the timeframe provided. This acquisition promises to bring greater choice and innovation to the payment ecosystem, enabling people, governments, and businesses to pay the way they want to pay.

The planned merger was inked in July 2016, in a deal which saw MasterCard take on a 92 percent stake, with the remainder to be held by British banks for three more years. VocaLink operates predominantly in the UK, but it licenses its software for automated clearing houses in Sweden, Singapore, Thailand, and the US. In 2015 alone, it processed over 11 billion transactions, to a total value of £6 trillion.

UK chancellor Philip Hammond welcomed news of the proposed takeover, saying at the time that it "shows that Britain remains an attractive destination for international investors."



MasterCard had hoped to complete the planned merger early this year.