Three out of five firms that issue councils with pre-paid cards have admitted breaching competition rules and agreed to pay penalties totalling more than £32m.
The Payment Systems Regulator (PSR) said that Mastercard, allpay, APS, PFS and Sulion engaged in anti-competitive behaviour by agreeing not to poach each other’s clients.
It alleges that there were two infringements of the Competition Act 1998 that took the form of market sharing or customer allocation.
One lasted between 2012 and 2018 involving all five parties and the other was between 2014 and 2016 involving APS and PFS.
The case relates to pre-paid cards used by local authorities to distribute welfare payments to vulnerable members of society.
Managing director of the PSR, Chris Hemsley, said: ‘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.
‘By colluding in this way, we consider the parties were acting as a cartel.
'Because of the reduced competition local authorities may have been missing out on an alternative supplier or products that were either cheaper or better suited to both their needs and the needs of those using the pre-paid cards.
‘Collusion in payments is absolutely unacceptable.'
Mastercard, allpay and PFS agreed to settle last month, admitting they took part in an anticompetitive arrangements.
Should the PSR ultimately conclude there have been infringements, the three companies have agreed to pay fines of £32m.