Mastercard's proposed acquisition of payment systems provider Vocalink has been questioned by the Competition and Markets Authority (CMA).

The watchdog said industry participants have raised concerns with the transaction, adding it has investigated a number of "theories of harm" which include loss of competition in payment infrastructure services to Bacs, FPS and LINK ATM scheme – all platforms run by Vocalink.

In relation to LINK ATM, the CMA found Vocalink and Mastercard are two of the three most credible providers of infrastructure services to the network operating across the UK. It claimed the merger would reduce the number of bidders and limit the ability of the LINK scheme to obtain good value when tendering for an infrastructure provider.

The CMA assessed the merger in the context of an ongoing review by the Payment Systems Regulator (PSR) into the ownership and competitiveness of infrastructure that supports the three major UK payment systems. The PSR has made a series of recommendations intended to improve competition in this space.

The CMA has not found concerns in the provision of payment infrastructure services to Bacs or FPS, suggesting there are "many credible alternatives to Vocalink and Mastercard".

Andrea Coscelli, acting CEO of the CMA, and decision maker in this case, commented: "The LINK ATM network provides an essential service for millions of customers.

"It's important that LINK has a good choice of providers when it comes to supplying the necessary infrastructure so it can take advantage of the opening up of payment systems to competition. These concerns warrant a closer investigation in the event that Mastercard cannot address them at this stage."

Both Mastercard and Vocalink can avoid the merger being referred for an in-depth investigation, according to the CMA, if they can offer a remedy to address the competition concerns identified by 11 January 2017.

Mastercard said it welcomed the watchdog's decision, adding: "The thoroughness of the CMA's review reflects the significance of this deal and its potential for the industry.

"In its announcement, the CMA noted that it has no concerns related to providing payment infrastructure services to Bacs or the Faster Payments Service," Mastercard added.

"We're pleased to have the opportunity to address their one concern, regarding the LINK ATM scheme, in the timeframe provided. This acquisition promises to bring greater choice and innovation to the payment ecosystem, enabling people, governments and businesses to pay the way they want to pay."