Mastercard to Share $44 Million Fine Over U.K. Welfare Funds
(Bloomberg) -- Mastercard Inc., allpay and PFS provisionally agreed to pay fines totaling more than 32 million pounds ($44 million) for their alleged role in a “cartel” exploiting pre-paid cards used to distribute welfare funds to the homeless and victims of domestic abuse.
The trio engaged in anti-competitive behavior by agreeing not to compete or poach each others’ clients, the U.K.’s Payment Systems Regulator said in a statement on its preliminary findings on Wednesday. Two other firms also accused of wrongdoing, APS and Sulion, haven’t reached a settlement.
“Collusion in payments is absolutely unacceptable,” Chris Hemsley, managing director of the PSR, said in the statement. “Pre-paid card services, like these, can provide significant benefits to local authorities as one way to make welfare payments to some of the most vulnerable people in society.”
The regulator opened an investigation into the companies in late 2017, conducting raids in early 2018 to gather evidence. Mastercard, allpay and PFS last month admitted they took part in monopolistic behavior and agreed to settle with the regulator.
Mastercard said in a statement it apologized for two of its former employees’ behavior and said it’s implemented training to ensure it doesn’t happen again.
Allpay said in a statement that it “accepts” the preliminary decision. The company said it informed the PSR immediately after it became aware of potential breaches of competition law by a number of entities, itself included.
EML Payments Ltd., which announced it was buying PFS in 2019, said it withheld 5 million pounds from the sellers of PFS to settle any financial penalties from the probe. It will now return approximately 4 million pounds after deducting incurred legal costs and said there is no financial impact to EML from the eventual fine.
“The vendors have accepted responsibility to resolve the issue and have worked proactively with EML since our acquisition of PFS,” EML said.
Any fines will only be levied if the PSR’s initial suspicions are confirmed. The parties now have the opportunity to make representations on the provisional findings, the authority said.
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