Britain’s competition regulator has raised concerns over MasterCard’s £700m deal to buy Vocalink, the company behind £6tn of payments a year.

The Competition and Markets Authority said the deal would reduce competition in the Link ATM network, where Vocalink operates the technology which helps process around 90 per cent of salaries, 70 per cent of household bills and all state benefits in the UK.

MasterCard and Vocalink are two of the three “most credible” providers of Link ATM technology in the UK, said the CMA.

“The merger would reduce the number of bidders and limit the ability of the Link scheme to obtain good value when tendering for an infrastructure provider”, it added.

MasterCard announced in July that it had snapped up Vocalink, which processed about 11bn transactions last year, more than half of all payments made in the UK. A group of 18 banks and building societies including Lloyds Banking Group, Barclays, HSBC, Royal Bank of Scotland and Santander owns Vocalink.

The CMA said the two companies can avoid an in-depth investigation if they respond to the regulators concerns by January 11.

“It’s important that Link has a good choice of providers when it comes to supplying the necessary infrastructure so it can take advantage of the opening up of payment systems to competition”, said Andrea Coscelli, acting chief executive of the CMA.

“The Link ATM network provides an essential service for millions of customers. These concerns warrant a closer investigation in the event that MasterCard cannot address them at this stage.”

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