Payment services provider Voca and banking network operator Link have announced plans to merge to become the largest processor of direct debit and direct credit transactions in Europe.

The new company VocaLink is expected to processes over eight billion transactions a year. VocaLink will be able to offer a range of services for both cash machines and automated payments.

The two companies are already working in partnership to build the infrastructure behind the UK’s Faster Payments initiative for real-time payments by the end of 2007.

The merger will give VocaLink the range of services required to compete in a European market when Single Euro Payments Area (Sepa) is enforced in 2008.

Voca processes 90 per cent of the UK’s salaries and 15 per cent of Europe’s automated payment volume and Link operates international cash machine network and services and real-time transactions.

The partnership will also provide a platform for innovation such as mobile banking, international money transfer and online billing.

The first services from the new company will include Sepa-ready and realtime payment services designed to accelerate domestic and cross-border payments.

The group also plans to use its combined network of partners across the telecommunications, financial, retail and public sectors to offer enhanced online and mobile services.

Voca chief executive Marion King will be chief executive of the merged company.

‘Voca and Link coming together is an exciting prospect,’ said King. ‘The move will create the broad product portfolio needed to compete in a wider European market in light of the introduction of Sepa.’

Under the terms of the proposed agreement VocaLink will be managed through a new board including independent non-executives. Peter Presland, Link’s current chairman, will assume the role of non-executive chairman.