UK: Mastercard fined £31.5m for operating pre-paid card cartels

UK: Mastercard fined £31.5m for operating pre-paid card cartels

by Pranali Mehta

UK regulator, Payment Systems Regulator (PSR), has reportedly fined five firms a total of £33 million ($44 million) for practicing in cartel-like behavior wherein they agreed not to compete or poach customers off each other for pre-paid cards.

Local authorities use pre-paid cards for distributing welfare payments to vulnerable people, such as the homeless, domestic violence victims, and asylum seekers.

Through its investigation, which was launched back in October 2017, PSR found that Mastercard, Advanced Payment Solutions (APS), allpay, Sulion, and Prepaid Financial Services (PFS) were breaking the competition law.

All parties have settled after admitting to breaking the law, with Mastercard receiving the largest fine of £31.5 million ($42.8 million), while APS was fined £755,419 ($1.02 million), allpay £28,555 ($38,844), PFS £916,746 ($1.24 million), and Sulion £572 ($778).

Chris Hemsley, Managing Director of PSR, stated that the regulator has zero-tolerance against cartel behavior which can be clearly seen through the investigation and the fines imposed are a clear message to enterprises to not partake in such behavior.

Hemsley added that this case was particularly serious as it meant less competition and choice for local authorities and that they might have missed out on products that were cheaper or of better quality and could be used by the most vulnerable members of the society.

When its initial findings were published in March 2021, PSR had said that companies coordinating to share the market will be fined.

At the same time, Mastercard has released a statement where it apologized for the actions of its two former employees which resulted in the company not meeting the standards expected from it.

PSR has stated that Mastercard was the only funder of the National Prepaid Cards Network, a group where councils and various public sector organizations, interested in pre-paid cards, were brought together with the managers of one the five firms.

When the network was set up in 2012, these firms had agreed on not targeting each other’s public sector customers; people that were either already in contract on were being provided the pre-paid services via the pilot program.

They instead colluded amongst each other to exclusively assign between each potential contract obtained through promotional events, claims PSR.

Source credit: https://www.independent.co.uk/news/business/mastercard-pre-paid-cards-cartel-b1995149.html

Pranali Mehta

A chemical engineer by qualification, Pranali Mehta dutifully walked down the slated path and worked in a chemical firm for a year. Her passion for writing however, pushed her into experimenting with the same as a career. With over three years of experience in content writ Read more...