Five payment companies including Mastercard have been fined a total of more than £33m for operating illegal cartels when providing prepaid cards for local authorities to distribute to vulnerable people. The companies were found by the Payment Systems Regulator to have broken competition law by agreeing not to compete with each other for the authorities’ custom. The regulator said that by acting in this way, the providers may have denied the councils access to cheaper products, and vulnerable people may have missed out on better quality services. The cards in question were used to distribute welfare payments to vulnerable members of society, such as the homeless, victims of domestic violence and asylum seekers. Benefits payments or emergency funds could be uploaded to the cards and used to pay for goods and services without the holder needing access to a bank account. The PSR launched an investigation in October 2017 and carried out dawn raids on premises in February 2018. It found evidence that between 2012 and 2018 five companies – Mastercard, allpay, Advanced Payment Solutions (APS), Prepaid Financial Services (PFS) and Sulion – were involved in a cartel, although some did not participate for all of that time. The cartel was organised against the backdrop of the National Prepaid Cards Network, which was sponsored by Mastercard and brought together public sector bodies that were potentially interested in prepaid cards and programme managers. The five parties arranged for the programme managers not to target or poach each other’s customers, and colluded on the allocation of potential business contacts that came in via network events. Between 2014 and 2016 there was a second cartel involving APS and PFS, with the companies agreeing not to target each other’s public sector customers when a contract was up for renewal, including through a tender. Despite the rule-breaking uncovered by the investigation, vulnerable card recipients would still have received their full benefits, but councils may have paid higher fees than in a competitive market, and there was no incentive for providers to improve the scope of the services. Chris Hemsley, the managing director of the regulator, said: “This investigation and the significant fines we have imposed send a clear message that the PSR has zero tolerance for cartel behaviour.” He added: “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.” Mastercard, which was fined £31.5m, said in a statement: “Mastercard is committed to upholding all regulatory and legal standards and we apologise that the actions of two former employees resulted in the standards expected of us not being met in this instance. “We have taken this issue very seriously and have put further controls and training in place to ensure it cannot occur again, while working with the PSR to settle this matter at the earliest possible opportunity.”