Mastercard, allpay, APS, PFS and Sulion engaged in anti-competitive behaviour by agreeing not to compete or poach each other’s clients. That is, according to the UK Payments Systems Regulator (PSR).

The case relates to pre-paid cards used by local authorities to distribute welfare payments to vulnerable members of society. Such examples include the homeless, victims of domestic violence and asylum seekers.

The PSR has sent a Statement of Objections to the five firms.

Specifically, the PSR alleges that there were two infringements of the Competition Act 1998. These took the form of market sharing/customer allocation:

  • One lasting six years (between 2012 and 2018) and involving all five parties,
  • The other lasting two years (between 2014 and 2016) and involving APS and PFS.

The Statement of Objections sets out the PSR’s case against the parties. However, it is not the end of the investigation. Now, the parties have the opportunity to make representations on the provisional findings.

Mastercard, allpay and PFS settle with PSR

In February 2021 Mastercard, allpay and PFS agreed to settle with the PSR. They admitted that they took part in the alleged anticompetitive arrangement(s). Should the PSR ultimately conclude that there have been infringements, Mastercard, allpay and PFS have agreed to pay maximum fines totalling over £32m.

Chris Hemsley, Managing Director of the Payment Systems Regulator, comments: 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.

Collusion in payments is absolutely unacceptable. Where we see it happening, we will take action, stop it, and seek to impose significant penalties.”

PSR findings

The PSR first started work on this investigation in October 2017. In February 2018, the PSR carried out unannounced searches at a number of premises.

The PSR provisionally concludes that the parties coordinated their commercial behaviour. They shared the market and allocated customers in relation to the supply of prepaid card services. The pre-paid cards operated on just the Mastercard scheme.

In addition, the PSR has provisionally found that between 2014 and 2016 APS and PFS arranged not to target each other’s public sector customers when a contract was up for renewal, including through a public tender.

As a consequence of the alleged collusion, public bodies were limited in the choice of suppliers of pre-paid cards services. In turn, this potentially deprived public bodies of lower prices and better quality for those services.