Payment Systems Regulator fines five companies in prepaid card cartel

The UK’s Payment Systems Regulator (PSR) has issued fines to Mastercard, allpay, Advanced Payment Solutions, Prepaid Financial Services and Sulion.

The fines were issued after the PSR concluded the parties infringed competition law by agreeing not to compete or poach each other’s customers in the prepaid cards market in Great Britain.

These 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.

This decision came from an investigation by the PSR, which opened in October 2017 following a compliant made by allpay about one of the infringements. In February 2018, the PSR completed unannounced searches at the premises of some of the parties. It announced its provisional findings in March 2021.

During the investigation, all parties settled and admitted breaking the law.

The fines for each company include: Mastercard: £31.5m; PFS: £916,746; allpay: £28,553; APS: £755,419 and Sulion: £572.

Payment Systems Regulator managing director Chris Hemsley 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.”

PSR identified two cartels in the prepaid cards market in violation of the Competition Act 1998.

The first involved all five parties and lasted from 2012 to 2018, but some parties participated in the infringement for a shorter time.

This was developed against the backdrop of the National Prepaid Cards Network. The network collated public sector bodies that were interested in prepaids and Mastercard programme managers (PMs).

The five parties arranged for the Network PMs (allpay, APS and PFS) not to target of poach each other’s public sector customers that were either already in contract with another Network PM or were being provided services through a pilot programme by another Network PM.

Additionally, the parties agreed to exclusively allocate between each of the Network PMs potential new public sector customer contacts obtained from Network promotional events.

The second cartel involved APS and PFS and lasted between 2014 and 2016. This involved a separate arrangement between these two parties to not target each other’s public sector customers when a contract was up for renewal.

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