Mastercard and others fined for cartel behaviour in prepaid cards market

Five companies including Mastercard have been handed fines totalling more than £33 million for infringing competition law in relation to Britain’s prepaid cards market.

The Payment Systems Regulator (PSR) said it had concluded that the companies infringed competition law by agreeing not to compete or poach each other’s customers.

Mastercard received the biggest fine among the five, of £31.56 million.

The prepaid cards were used by local authorities to distribute welfare payments to vulnerable members of society, such as the homeless, victims of domestic violence and asylum seekers, the PSR said.

Among the other companies, Prepaid Financial Services (PFS) was fined £916,746, allpay was fined £28,553, Advanced Payment Solutions (APS) was fined £755,419 and Sulion was fined £572.

Chris Hemsley, managing director of the PSR, said: “This investigation and the significant fines we have imposed send a clear message that the PSR has zero tolerance for cartel behaviour.

“We will intervene and enforce the law strictly to ensure there is effective competition in payments markets.

“This case is particularly serious because the illegal cartel behaviour meant there was less competition and choice for local authorities. This means they may have missed out on cheaper or better quality products which were used by some of the most vulnerable in society.”

The PSR found there were two market sharing cartels in the prepaid cards market in violation of the Competition Act 1998.

The first cartel involved all five parties and lasted from 2012 to 2018, although some parties participated in the infringement for a shorter period of time, the regulator said.

The first cartel developed against the backdrop of the national prepaid cards network, which brought together public sector bodies such as local authorities and housing associations that were potentially interested in prepaid cards. Mastercard sponsored and, other than for a short period in 2016, wholly funded the network, the PSR said.

The second cartel involved APS and PFS and lasted between 2014 and 2016.

It involved an arrangement between APS and PFS not to target each other’s public sector customers when a contract was up for renewal, including through a public tender, the regulator said.

The PSR announced its provisional findings in March 2021 and it said the companies were handed reduced fines as settling parties.

Mastercard, allpay and PFS settled the investigation with the PSR before the issuing of the statement of objections, which contained the provisional findings. The other two, APS and Sulion, agreed to settle after that.