Mastercard among five companies fined after engaging in ‘cartel behaviour’
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Mastercard, along with four other companies, allegedly engaged in anti-competitive behaviour when offering pre-paid cards to vulnerable people.
Mastercard, allpay, APS, PFS and Sulion engaged in anti-competitive behaviour by agreeing not to compete or poach each other’s clients, the Payment Systems Regulated (PSM) has said.
As a result of the alleged collusion, the PSR said, public bodies were limited in the choice of suppliers of pre-paid cards services, and potentially deprived of lower prices and better quality for those services
In February, Mastercard, allpay and PFS agreed to settle with the PSR and admitted they took part in the alleged anti-competitive arrangements. They will each pay fines of a combined £32m.
The regulator provisionally concluded that the parties coordinated their commercial behaviour to share the market and allocate customers for prepaid card services used by vulnerable people for welfare payments to public bodies in England, Scotland and Wales.
The deal between all five parties lasted from 2012 to 2018, the payments regulator said, and a separate deal involving APS and PFS lasted between 2014 and 2016.
The investigation is ongoing and involved parties now have the opportunity to respond to the regulator’s findings.
Chris Hemsley, manging director of the Payment Systems Regulator, said: “Pre-paid card services, like these, can provide significant benefits to local authorities as one way to make welfare payments to some of the most vulnerable people in society.
“By colluding in this way, we consider the parties were acting as a cartel. Because of the reduced competition local authorities may have been missing out on an alternative supplier or products that were either cheaper or better suited to both their needs and the needs of those using the pre-paid cards.”
‘We apologise’
Other than for a short period in 2016, Mastercard sponsored and wholly funded the National Prepaid Cards Network, whose members were the public sector bodies potentially interested in prepaid cards and the Mastercard programme managers.
The PSR found that the five parties agreed that programme managers who were not members of the network would not target or poach each other’s public sector customers that were being provided services through the network.
Mastercard said it took the issue very seriously and had put further controls and training in place, adding the incident was isolated to UK prepaid cards.
“We apologise that the actions of two former employees resulted in the standards expected of us not being met in this instance,” a Mastercard spokesman said.
Allpay said it accepted the PSR’s decision, adding it had immediately informed the regulator after it became aware of potential breaches and had cooperated fully with the investigation.
Australia’s EML, which bought PFS in 2019, said it had worked collaboratively with the regulator to resolve the issue and arrangements were already in place for PFS’s previous owners to cover the cost of its around 920,000 pound fine.
APS was not immediately available for comment. Sulion could not be reached.