Vocalink: Direct bank-to-bank mobile payments poised to rise
Vocalink: Direct bank-to-bank mobile payments poised to rise

Vocalink: Direct bank-to-bank mobile payments poised to rise

With its acquisition of Vocalink, Mastercard is bringing bank account-based payments under its umbrella, in addition to card payments, giving customers new ways to pay through new devices.

The acquisition of UK-based payments specialist Vocalink by Mastercard, first announced in June 2016, was a complex deal that unfolded slowly and came under considerable scrutiny from competition authorities along the way – but was finally completed in early May this year.

This was more than a strategic acquisition, according to Mastercard executives. What lies at its core is opportunity for payments innovation.

“This is a transformational deal,” said Michael Miebach, chief product officer of Mastercard, on the announcement of the deal’s completion. “This acquisition brings Vocalink’s world-class technology and world-class people to Mastercard at a time of continued change in payments. I am eager for what the future will bring: more innovation, inclusion and choice that lets people, businesses and governments pay the way they want.”

Internet of Business spoke with Martin Hargreaves, head of product strategy at Vocalink, to dig down into what the company brings to its new owner.

Read more: Mastercard: “Every connected device will be a commerce device.”

Bank-to-bank payments

Vocalink, Hargreaves explained, has provided the central infrastructure for UK bank-to-bank payments for many years, first with BACS and then with the introduction of Faster Payments Service in 2008, which has gone on to become the largest real-time payments service in the world.

With its newer Immediate Payments Service, Vocalink has added new functions and taken real-time payments international, into Singapore and Thailand, and soon the US, where it is scheduled to go live later this year.

“What we bring to the picture,” Hargreaves explains, “is an answer to the question: ‘How do you make a payment from an IoT device?’ What we specialise in is a bank-to-bank network where a request for payment can go in real time. We connect all of the bank accounts in a given country where we’re deployed but we also connect for requests for payment.”

“So, effectively, anything connected to a bank channel can connect to anyone with a bank account. Anywhere there’s an IoT-type device – a smart parking meter, for example – might ping a request for payment, which will end up in a user’s mobile banking app.”

In effect, by acquiring Vocalink, Mastercard brings bank account-based payments under its umbrella, in addition to card payments. And in this way, it is aiming to offer new ways to pay for customers, by bringing real-time payment options to new places and new devices, using the real-time payments network ‘rails’ that Vocalink provides.

(Credit: Mastercard)

New dimensions in mobile payments

That potentially brings a whole new dimension to mobile payments. As Hargreaves points out, it allows us to use our trusted mobile banking app to make both online and in-store payments directly from our accounts, without our personal information ever leaving our bank.

In turn, that could encourage greater participation in e-commerce and mobile commerce among those who hold back right now, due to security concerns or, in some cases, the lack of a credit card.

“The crux of what we do is give control back to the customer, with request for payments going through the banks, adding elements of safety that help with the comfort factor,” says Hargreaves.

In other words, while card-based mobile payments across a variety of wallets dominate mobile payments right now, account-to-account payments made from smart devices to look set to rise, increasing in both volume and value over time. And Mastercard, with Vocalink, is likely to be a serious player in driving that trend.