Cashless in Copenhagen

Always a joy to come to a city and not have to worry about not having cash.

It’s great to be attending Money 2020 Europe, a stellar congregation of payment specialists to catch up with and glean insight from.

Speaking of cashless payments, the UK Payment Systems Regulator (PSR) has recommended UK banks reduce their stake in VocaLink, the UK payments system operator responsible for schemes such as Bacs, LINK and Faster Payments and hot off the back of that news came the rumours MasterCard may make a £1bn (£1.4bn) bid.

It probably shouldn’t come as too much of a surprise that MasterCard might make a beeline for VocaLink. It would be a perfect addition to its payments portfolio which, certainly debit card-wise in the UK debit, is slim. It doesn’t take long to count the number UK banks issuing MasterCard-branded debit cards, overshadowed hugely by its cousin Visa.

As a result, MasterCard has gone on an innovation-backing spree, getting behind projects such as Transport for London contactless ticketing, Apple Pay, paving the way for higher value contactless transactions and targeting challenger banks such as Metro Bank.

To have a control of VocaLink would give MasterCard a firm stake in payments generally in the UK and Europe-wide; a stake in Faster Payments would be great for MasterCard, with the current international drive towards real time payments- not just this but VocaLink’s system is world class, having already been used as a model in Sweden, the US and for mobile payments in Thailand.

MasterCard might be able to give Zapp the boost it needs to get off the ground, further increasing its cut of real time payments and mobile payments through the app. Equally, as has been suggested, MasterCard may want to sack Zapp altogether.

With the incoming PSD2, MasterCard could be well-placed with a stake in VocaLink to be at the heart of a burgeoning payments arena. In fact it could be an extremely shrewd move by the card issuer to swoop in at the advent of this change.

Retailers, with a customer’s consent, will soon be able to access payment information from a bank to take a payment, bypassing the card transaction altogether. And with the inevitable growth of cross-border e-commerce, the future here looks bright indeed. Although, as David Parker keenly points out in this issue, PSD2 may not marginalise card payments as new PISPs won’t be able to compete with newly lowered card interchange fees.

One question, however, does overhang the proposed divestiture of VocaLink: is there a guarantee the systems will best-serve all parties involved, leading to better-serving the end user consumer or SME? After all, this is one of the three main objectives of the PSR: to promote competition, to promote innovation and to protect the interests of its users.