PSR and FCA Launch Joint Call for Information on Big Tech and Digital Wallets

The Payments Systems Regulator (PSR) and Financial Conduct Authority (FCA) have issued a joint call for information regarding the benefits and risks associated with digital wallets, as their use continues to grow rapidly among consumers and businesses in the UK.

Digital wallets have seen a significant increase in usage over the past few years, with more than half of UK adults now utilizing services like Apple Pay, Google Pay, and PayPal. These platforms have become crucial points of interaction between big tech firms and UK consumers, driving the regulators to seek a deeper understanding of their impacts.

Key Areas of Focus

The PSR and FCA are particularly interested in several key aspects of digital wallets:

Benefits for Service Users: Understanding the advantages that digital wallets offer to consumers and businesses.

Payment Efficiency: Identifying any features that may hinder the optimal performance of payment processes for users.

Account-to-Account Payments: Exploring the potential of digital wallets to facilitate account-to-account payments and their effects on competition between different payment systems.

Competition and Consumer Protection: Assessing whether digital wallets pose any significant risks related to competition, consumer protection, or market integrity.

Insights from Industry Leaders

David Geale, Managing Director of the PSR, emphasized the importance of collaboration between regulators and industry stakeholders. He stated, “Digital wallets are steadily becoming a go-to payment type and while this presents exciting opportunities, there might be risks too. Collaboration between regulators and working with industry is crucial to ensure were on the front foot to support innovation and competition, making sure everyone benefits from access, protection, and choice in payments. We look forward to hearing views and evidence from a wide range of stakeholders throughout this process.”

Nikhil Rathi, Chief Executive of the FCA, echoed these sentiments, highlighting the transformative impact of digital wallets on payment habits in the UK. “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 maximize the opportunities and benefits for consumers and businesses while protecting against any risks this technology may present.”

Next Steps

The PSR and FCA are inviting stakeholders to share their views and evidence on the various aspects of digital wallets. The regulators will analyze the responses and provide an update on their findings by the first quarter of 2025.

As digital wallets continue to reshape the payment landscape, this joint initiative by the PSR and FCA aims to ensure that the evolving technology benefits consumers and businesses while addressing potential risks and maintaining market integrity.