Yahoo Finance Mastercard faces £32m fine for 'cartel' that harmed vulnerable customers
Mastercard faces fines of up to £32 million for its involvement in a cartel that affected the most “vulnerable members” of society over six years.
The payments watchdog found Mastercard and four other firms had colluded to share the prepaid card services market, commonly used by public bodies for welfare payments to the homeless, domestic violence victims and asylum seekers.
Public bodies were potentially deprived of lower prices and better quality services as a result, the Payments Systems Regulator said.
Between 2012 and 2018, Mastercard funded a network made up of public sector bodies and programme managers Allpay, APS, and PFS, which issued prepaid cards for Mastercard. The network was set up by a firm called Sulion, which the PSR said promoted the use of prepaid cards to the public sector.
During this period these firms arranged for programme managers not to target or poach each other’s public sector customers. In the early days of the network, the parties also colluded to allocate leads between them, the PSR found.
The regulator raided several of the firms’ offices in 2018 as part of the investigation. Last month Mastercard, Allpay and PFS agreed to settle with the regulator and now face fines totalling over £32 million. The Telegraph understands that as the largest firm Mastercard will pay about 98pc of this fine.
Chris Hemsley, of the Payment Systems Regulator, said: “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 prepaid cards.”
A spokesman for Mastercard said the breach resulted from the actions of “two former employees”. The firm said: “Mastercard is committed to upholding all regulatory and legal standards and we apologise that the actions of two former employees resulted in the standards expected of us not being met in this instance.”
A spokesman for Allpay said it had informed the watchdog after becoming aware of potential breaches of competition law and cooperated fully with the investigation. He said: “Allpay has today accepted the decision made by the regulator regarding a significant case involving breaches of competition law, affecting local authority payments to vulnerable people.”
A spokesman for APS, also known as Cashplus, said the firm was confident that its activities did not cause customer or market detriment. "Today's announcement concerns alleged competition issues within a market in which APS operated at very small scale and exited more than five years ago," he said.
PFS and Sulion could not be reached for comment. The PSR said the investigation was ongoing.
