Big tech and digital wallets under regulatory scrutiny 

The payments and financial regulators ask for views on the impacts that Apple Pay, Google Pay and Paypal have on people and businesses

The Payment Systems Regulator (PSR) and the Financial Conduct Authority (FCA) are seeking views on the benefits and risks digital wallets bring to society. 

The use of digital wallets has grown rapidly over the last few years, and it is likely that more than half of UK adults now use one, the regulators said.

They added that, with Apple Pay, Google Pay and PayPal being three of the most widely used digital wallets in the UK, digital wallets have become an increasingly important touchpoint between Big Tech firms and UK consumers.

David Geale, the PSR’s managing director, said: 

‘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 we’re on the front foot to support innovation and competition, making sure everyone benefits from access, protection and choice in payments.’

The call for information is open until 5pm on September 13 and the regulators would like to hear from those including technology providers, service users and other parties with an interest in digital wallets.

‘We look forward to hearing views and evidence from a wide range of stakeholders throughout this process,’ Geale added. 

The regulators will consider feedback and provide an update by the first quarter of 2025.

Digital wallets impact on consumers’ choice of payment options

The regulators want to understand more about the range of benefits digital wallets bring to people; whether any features mean payments do not work as well as they could; and whether digital wallets could raise any significant competition, consumer protection or market integrity issues.

The PSR is particularly interested in understanding how digital wallets impact consumers’ choice of payment options at checkout.

The FCA’s regulatory remit gives it a particular interest in issues such as how digital wallets may impact competition in the supply of financial services and the operational resilience of the UK financial services sector.

Competition concerns about contactless payments on iPhones

The European Commission this month made commitments offered by Apple legally binding under EU antitrust rules.

The commitments address the Commission’s competition concerns about Apple’s refusal to grant rivals access to the standard technology used for contactless payments on iPhones.

Apple is also being sued by the US Department of Justice in a lawsuit that accused the tech giant of harming consumers by limiting choice.

We calculate that UK consumers could be owed £22.5 billion from 12 of the biggest claims, with every adult on average eligible to join 5 of these consumer claims against big brands. Big tech brands, such as Apple, Google and Amazon, been accused of breaching competition law and ripping off customers. 

Giving consumers choice over the services they use

Nikhil Rathi, the FCA’s chief executive, said: ‘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 digital markets, competition and consumers act, which became law in May, gives the Competition and Markets Authority (CMA) new powers in this area.

It will be able to stop technology businesses with ‘strategic market status’ from misusing their position to the disadvantage of consumers and competitors.

The rules could give consumers the room to freely choose the services they use, or stop companies from withholding information consumers need to make good decisions.  

The PSR and FCA have said they will work closely with the CMA.