Albeit sometimes legal, vertical integration can end up damaging competition. If an internal expansion along the supply chain rarely has legal impediments, the same movement done by means of a merger or acquisition tends to ring an alarm on competition authorities. As an example, banks (alone or in consortium) can acquire control of financial market infrastructures, then restrict competitors (FinTechs or, in the e-money market, mobile network operators) from accessing such infrastructures. Considering that creating alternative infrastructures generally is expensive and inefficient, such move by incumbents amounts to market foreclosure1. Vertical integration may as well serve as an entry barrier by reducing the costs of incumbents, thus putting entrants at a disadvantage2. The authority should make sure that the legal and regulatory framework have a solid competitive aspect.
Type of access allowed by Automated Clearinghouses (ACHs) to the following entities
| COMMERCIAL BANKS | BANKS OTHER THAN COMMERCIAL | INTERNATIONAL MTOs | LOCAL MTOs | EXCHANGE BUREAUS | SUPERVISED NBFIs | UNSUPERVISED NBFIs | MNOs AND OTHER NON-BANK E-MONEY ISSUERS | POSTAL NETWORK | NATIONAL TREASURY | OTHER NON-BANK PSPs | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Direct and indirect access | 100% | 77% | 21% | 29% | 15% | 51% | 17% | 28% | 31% | 45% | 37% |
| No access | 0% | 13% | 55% | 51% | 54% | 38% | 58% | 53% | 46% | 35% | 43% |
| Not applicable | 0% | 10% | 24% | 20% | 31% | 11% | 25% | 19% | 23% | 20% | 20% |
1. Soursourian, M. and A. Plaitakis (2019), “Fair Play: Ensuring Competition in Digital Financial Services”, CGAP, Washington, DC, https://www.cgap.org/research/publication/fair-play-ensuring-competition-in-digital-financial-services (accessed on 30 August 2025).
2. Balakrishnan, S. and B. Wernerfelt (1986), “Technical change, competition and vertical integration”, Strategic Management Journal, Vol. 7/4, pp. 347-359, https://doi.org/10.1002/SMJ.4250070405;PAGE:STRING:ARTICLE/CHAPTER.
