The UK Financial Conduct Authority (FCA) and Payment Systems Regulator (PSR) have published a statement on the rise and usage of digital wallets. The two regulators note that the use of digital wallets has grown in recent years, with card transactions using a digital wallet increasing from 8% in 2019 to 29% in 2023.
The two regulators declare that there are significant benefits to consumers in utilizing digital wallets as they provide greater convenience, improved security, and, at times, “greater financial inclusion.”
In July 2024, the FCA and PSR joined in requesting information on big tech and digital wallets while noting their responsibilities include a competition mission. The request for feedback closed in September 2024.
The regulators state:
Based on the evidence we have obtained, we have the following comments on the questions raised in the invitation to comment:
• We agree on the scope of the proposed investigations. We welcome the reference to digital wallets in the scope of the possible interventions aimed at addressing Apple and Google, potentially leveraging their market power into adjacent activities. We particularly note the significance of considering digital wallets in the light of the competition concerns and opportunities we have heard from stakeholders during our Call for Evidence.
• We agree on the proposed avenues of the investigation, including the proposed consumer research. Beyond that, we note, in particular, the need for appropriate technical and technological expertise given the complexity of the technical issues raised.
• With respect to the potential interventions, we note the approaches taken by the European Commission in relation to the opening up of Near Field Technology. We would draw particular attention to stakeholders, highlighting the need for potential interventions to focus on ensuring open access on reasonable terms. These may be relevant for the CMA [Competitiona and Markets Authority] in considering any intervention.
The FCA and PSR said they are committed to working with the CMA, which is investigating both Google and Apple and their digital wallet offerings, which have become quite popular with consumers.
The CMA is currently reviewing whether to designate Apple and/or Google as having strategic market status (SMS), with two consultations closing for comments earlier this month. A determination will be made public later this year.