Decision means merged company can start moving on its ambitious plans to expand across European markets in the build-up to the Single Euro Payment Area.
The Office of Fair Trading has given the companies behind the UK’s Faster Payments initiative Voca and Link the green light to merge, with the new company being called VocaLink. Marion King, presently Voca’s chief executive, will retain the position at VocaLink.
The new group will offer a broad range of services for both cash machines and automated payments, providing reach across Europe for Single Euro Payments Area transactions. VocaLink will also deliver real-time solutions, such as Faster Payments which is going live in November this year, and use its network of partners to offer enhanced online and mobile services.
Voca processes more than 90% of UK salaries, 70% of household bills and the majority of state benefits. Link processes 2.9 billion ATM transactions per annum. It is the operator of the UK cash-machine network, connecting 130 million card accounts and over 63,000 ATMs. The combined group will have a forecast volume of over 8 billion transactions this year. The firm believes that the merger will enable VocaLink to compete more effectively on a pan-European scale in readiness for the advent of SEPA in 2008.
King said: “I am delighted that the OFT has approved the merger and we can now progress with plans to bring the businesses together. Voca and Link are already working closely on the UK’s Faster Payments initiative and the operational and intellectual synergies between the two companies have always been clear. The unified company will offer an increased portfolio of innovative products and services to the payments industry.”
King believes that Faster Payments will give VocaLink a competitive advantage in Europe. “Clearly the focus initially is on the UK and still the bulk of the payments and transactions happen within a country. However, the volumes of cross border payments are increasing as we go forward, as behaviours change. SEPA will enable easier transition of payments across borders. So what will happen is this service is leading edge, ahead of the game in terms of having a single message streaming message service in real time, and it is my intention as chief executive of VocaLink going forward to provide this service beyond the UK and certainly to start with Europe.”
Voca and Link first joined forces in late 2005 to beat Visa early the next year in a bid to supply a new central infrastructure for faster payments in the UK. The pair created a joint venture, Immediate Payments, which was chosen by APACS to build, develop and manage the new platform to increase the speed of credit transfer from one account to another in near real-time by 2007.
At the time, John Fingleton, OFT chief executive (pictured left), welcomed the development. “This is really good news for both personal and business bank customers. The banking industry has met all the criteria set for it,” he said. “I am particularly pleased that the near real-time service, available 24/7, to be introduced by the end of 2007, goes even further than the Task Force recommended. This shows how well this sort of collaborative approach between industry, consumer and business bodies and government can work.”
In September 2006 Voca finished a five-year systems overhaul, replacing the core system underpinning the UK’s £3 trillion automated payments business with the Voca Payments Engine. The completion of the project marked the final step in a programme to renew its entire payments infrastructure, which consisted of over 40 projects, including the development of Bactsel-IP.
The system was built by Voca on behalf of BACS Payment Schemes and its 13 member banks. It was aimed to deal with the 12% per year increase in UK electronic transactions, plus enable banks and Voca to deliver new payments services and support the wider industry to comply with SEPA requirements.
The payments engine, which processes the UK’s direct debits, direct credits and standing orders, was completed on schedule after five months of development. The engine is flexible in handling cross-border, multi-currency payments which is needed in the changing payments environment in Europe.
In November 2006 Link announced a new corporate structure, separating its ATM Scheme, which governs the UK cash machine network, from the Link infrastructure company, a commercial organisation which provides switching and network services that connect members of the ATM Scheme. Both entities are involved in the merger.