The Payments Systems Regulator (PSR) and Financial Conduct Authority (FCA) have announced a joint call for information on the rapidly growing use of digital wallets provided by Big Tech firms in the UK.

The regulators are seeking to better understand the benefits and potential risks associated with these payment methods, which have become increasingly popular among British consumers.

Digital wallets, such as Apple Pay, Google Pay, and PayPal, are now estimated to be used by more than half of UK adults. This surge in adoption has prompted the regulators to examine the impact on consumers and businesses, as well as potential implications for competition and market integrity.

David Geale, Managing Director of the PSR, emphasised the importance of this review, stating, "Digital wallets are steadily becoming a go-to payment type and while this presents exciting opportunities, there might be risks too." He added, "Collaboration between regulators and working with 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 inquiry will focus on several key areas, including: the range of benefits digital wallets offer to users; any features that may hinder optimal payment functionality for consumers or businesses; the role of digital wallets in promoting account-to-account payments and their impact on competition between payment systems, and; potential competition, consumer protection, or market integrity issues, both present and future

FCA chief executive Nikhil Rathi highlighted the significance of this shift in payment habits, saying, "The UK is seeing a seismic shift in how people pay, as digital wallets become a part of everyday life for many people. We want to make sure we can maximise the opportunities and benefits for consumers and businesses while protecting against any risks this technology may present."

The regulators are inviting input from a wide range of stakeholders, including digital wallet and technology providers, service users, and other interested parties. The call for information is open until 5pm on Friday, 13 September 2024.

This initiative builds upon previous work by both regulators, including the PSR's examination of contactless mobile payments and the FCA's study of Big Tech activity in financial services. It also aligns with international efforts to scrutinise the growing role of technology giants in the financial sector, such as those undertaken by the European Commission and the US Department of Justice.

The regulators plan to analyse all responses received and provide an update by the first quarter of 2025. This review comes in the wake of the recently passed Digital Markets, Competition and Consumers Bill, which introduces significant reforms to the UK's digital markets and competition regimes.

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