Under the terms of the deal, a majority of VocaLink’s shareholders will retain 7.6 % ownership for at least three years.
However, the transaction is subject to regulatory approval and other customary closing conditions.
VocaLink currently runs payments technology platforms on behalf of UK payment schemes.
It also offers mobile payments app and licenses its software and provides services to support automated clearing house (ACH) activities in Sweden, Singapore, Thailand and the US.
The company reported a revenue of £182 million last year, processing over 11 billion transactions.
The acquisition is expected to speed up MasterCard’s efforts to become an active player in all types of electronic payments and payment flows.
It will also strengthen MasterCard’s strategic role in the UK payments ecosystem.
MasterCard president and CEO Ajay Banga said: “VocaLink is a unique company with outstanding technology, assets and people. We look forward to investing in and maximizing the technology, and embedding it in our products and solutions, both in the UK and around the world.”
After the completion of the transaction, VocaLink’s current CEO David Yates will join the MasterCard management committee.
Yates said: “We will continue to focus on ensuring that the UK systems perform seamlessly, maintaining the highest levels of quality. At the same time, we’ll invest in further innovation to power competitive payments solutions for consumers and businesses around the globe.”
MasterCard expects the transaction to be dilutive for up to 24 months after the completion of the deal.
In February, a report by the UK's Payment Systems Regulator (PSR) urged banks to sell their stakes in payments infrastructure as part of a fundamental change to increase competition.
VocaLink was formed out of the merger between Voca and LINK Interchange Network in July 2007.
Image: MasterCard to buy VocaLink for £700m. Photo courtesy of MasterCard.
