Why Mastercard is playing the polite guest in the UK

Mastercard, despite being a brand as American as apple pie, is in fact decidedly international in nature. The company only earns about 40 per cent of its revenue in the Americas. It has a German chief executive and an Indian chief financial officer. Yet its Belgian chief product officer told investors last month that outside the US, the card giant was still “a guest”.

And for any guest, it’s important to know when to make a strategic exit. Mastercard has recently explored selling a majority stake in Vocalink, which provides the infrastructure for several of the UK’s critical non-card payments systems. The most likely buyer would be an entity owned by many of the same British banks that sold Vocalink to Mastercard back in 2016.

Discussions are preliminary but even the notion of a deal is a sign of how politics — and the pursuit of “tech sovereignty” — is becoming impossible to ignore for US tech companies. Questions of national identity, long an issue in industries such as airlines, are now a feature of the new economy too.

At issue in the UK is the Faster Payments System, which has been used for account-to-account transfers since 2008, and which Vocalink powers. The Bank of England wants to replace it with something more modern. In a normal tender process, Vocalink’s incumbency would give it an obvious advantage; it would almost certainly be able to build an upgraded system faster and more cheaply than domestic banks, which would have to build from scratch.

But European politicians and regulators are concerned about over-reliance on US-owned services that could be switched off or otherwise weaponised by a hostile Washington. Such ideas once seemed like conspiracy theories, but a recent temporary block on non-US citizens using Anthropic’s AI models will only have added to worries. A Faster Payments replacement therefore presents the UK with an obvious opportunity to diversify its payments supply chain.

Mastercard chief Michael Miebach, who played a key role in the initial Vocalink acquisition, would presumably prefer to keep hold of it. But given the political context, a deal makes sense: better to own 49 per cent of a business with a long-term future than 100 per cent of one barred from its main growth opportunity. In 2024, the most recent year for which data is available, Faster Payments accounted for around 40 per cent of Vocalink’s transactions and was the only area where volumes materially increased.

Mastercard could keep Vocalink’s international business, which was split into a separate subsidiary a few years ago. And even if it sold control of the whole thing it should be able to continue selling value-added services such as a new fraud-detection product in the UK, regardless of who owned the underlying rails.

Partnering with local banks would echo the approach of groups including Microsoft, which has struck deals with European tech companies such as SAP to provide “sovereign cloud” services. The boring infrastructure bits might be locally owned, but Microsoft still gets to sell its software and services. Leaving your hosts to enjoy their own space might be less comfortable than having free run of their house, but it’s better than never getting invited back.

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