MasterCard has announced that it will be acquiring a 92.4 per cent stake in bank-owned payments technology company VocaLink for around £700 million.

VocaLink Holding’s existing shareholders also have the potential for an additional earn-out of up to £169 million if performance targets are met. Under the agreement, the majority of current VocaLink shareholders will retain 7.6 per cent ownership for at least three years.

Based in London, VocaLink operates key payments technology platforms on behalf of UK payment systems, including the BACS direct debit framework, the Faster Payments scheme and the LINK ATM network. It has also developed Zapp, the ‘Pay by Bank’ mobile app that is scheduled for an autumn launch.

Internationally, VocaLink licenses software and provides services to support Automated Clearing House (ACH) activities in Sweden, Singapore, Thailand and the US. In 2015, the company reported revenues of £182 million as it processed more than 11 billion transactions.

A consortium of 18 banks and building societies currently own VocaLink, including Barclays Bank, Royal Bank of Scotland, Lloyds Banking Group, HSBC and Santander. The sale news follows a recommendation by the Payment Systems Regulator earlier this year that the FIs should sell a share of their stake to help increase innovation and competition in the sector.

MasterCard said that the acquisition accelerates its efforts to be a more “active participant” in the UK payments ecosystem, while bringing “innovation and knowhow from across the globe” back to the UK.

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

“Today’s announcement is positive news for our partners, customers and employees,” added David Yates, VocaLink’s CEO. “We will continue to focus on ensuring that the UK systems perform seamlessly, maintaining the highest levels of quality. At the same time, we’ll invest in further innovation to power competitive payments solutions for consumers and businesses around the globe.”

The transaction is subject to regulatory approval and other customary closing conditions. Upon closing the deal, Yates will join the MasterCard management committee.

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