The UK’s Payment Systems Regulator (PSR) and Financial Conduct Authority (FCA) are soliciting feedback on various aspects of the rapidly expanding digital wallets sector.
The PSR and FCA suggested that a majority of UK adults are now using digital wallets, pointing out prominent providers such as Apple Pay, Google Pay, and PayPal.
They highlighted digital wallets as an increasingly significant interface between major tech companies and UK consumers, emphasizing the need to comprehensively understand their effects on both consumers and businesses as their usage continues to grow.
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While they acknowledge the potential benefits of this technology for users, much attention is expected to center on competition issues, particularly given the involvement of major tech companies.
The regulators are exploring both the positive impacts and potential drawbacks associated with digital wallets, and are governing their investigation’s focus utilizing four key factors. However, given Apple’s recent antitrust case resolution with the European Union concerning Apple Pay, the presence of heightened competition is particularly noteworthy.
Apple has made commitments to the European Commission, promising to provide NFC functionality access to third-party mobile wallets and allow iPhone users to designate a non-Apple Pay option as their default wallet. These pledges aim to resolve a four-year case whereby Apple was accused of unlawfully restricting competition in the market.
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Another case involving online restrictions by Apple Pay was also settled at the EU level, concluding proceedings related to Apple’s actions in the UK.
Despite this, the UK remains focused on regulating big tech to ensure a competitive and functional digital wallet market.
“Digital wallets are steadily becoming a go-to payment type and while this presents exciting opportunities, there might be risks too,” said David Geale, Managing Director of the PSR. “Collaboration between regulators and working with [the] industry is crucial to ensure we’re on the front foot to support innovation and competition, making sure everyone benefits from access, protection and choice in payments.”
The FCA is focused on understanding how digital wallets might affect competition in financial services supply, as well as the operational resilience and systemic safety of the UK’s financial sector. FCA Chief Executive, Nikhil Rathi, stated that they aim to maximize the opportunities and benefits for consumers and businesses while ensuring protection against any risks that this technology may present.
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