The Payments Systems Regulator (PSR) and Financial Conduct Authority (FCA) are seeking views on the benefits and risks digital wallets bring to people and businesses.
They say that the adoption of digital wallets has significantly increased in recent years, and believe that around 50% of UK adults now use them. Among the most popular digital wallets in the UK are Apple Pay, Google Pay, and PayPal, making them important touch points between major tech companies and UK consumers.
As a result, the PSR and FCA would like to understand the impact on consumers and businesses that digital wallets’ increasing popularity creates, including:
- the range of benefits that digital wallets bring for service users;
- whether there are any features that mean payments don’t work as well as they could for consumers and/or businesses;
- their role in unlocking the potential of account-to-account payments and how they could impact competition between payment systems; and
- whether digital wallets could raise any significant competition, consumer protection or market integrity issues, either now or in the future.
This builds upon PSR’s previous work on contactless mobile payments and the FCA’s work on big tech activity in financial services.
The FCA’s regulatory remit gives it a particular interest in issues such as how digital wallets may affect competition in the supply of financial services and the operational resilience and systemic safety of the UK financial services sector. There has been a significant amount of interest on this issue internationally, including by the European Commission and the US Department of Justice.
In the UK, the Digital Markets, Competition and Consumers Act received Royal Assent in May. Once it comes into full effect, the Act will introduce significant reforms to the UK’s consumer, digital markets, and competition regimes. The CMA’s Digital Markets Unit will be granted powers to enforce a new regulatory regime for firms in digital markets that have “strategic market status”.
The call for views ends on 13 September 2024.
